Elon Musk’s business empire may be starting to wobble.

Over the past six weeks, the value of Tesla’s shares has plunged about 40 percent, wiping out virtually all they had gained after the 2024 election. This reversal reveals Mr. Musk’s soft underbelly: His fortune depends heavily on the inflated expectations of his rabid following. As those expectations deflate, so will his power, demonstrating that financial markets are an underappreciated guardrail against both Mr. Musk’s and President Trump’s agendas.

It is tempting to compare Mr. Musk to the true business titans of the past quarter-century such as Apple’s Steve Jobs, Microsoft’s Bill Gates, Amazon’s Jeff Bezos, Meta’s Mark Zuckerberg, Nvidia’s Jensen Huang and Google’s Larry Page and Sergey Brin. But those individuals created genuinely huge businesses that eclipse anything Mr. Musk has built, by any possible metric. While Mr. Musk has built a car company from the ground up — no easy feat — his wealth is largely thanks to a financial cult, one in which legions of dazzled investor-followers have enabled him to start an ever-growing number of disparate initiatives and provided immunity from critics who question his operational decision making, his corporate governance, his obscene pay packages and now his migration into the political sphere.

The high-wire act goes something like this: Dream up a business so ambitious that any setback is trivial and every accomplishment heroic. Identify yourself as the manic genius behind this ambitious business in order to personally capitalize on outsize returns from excited investors. Enlist social media to cement your iconic status, keeping your believers so enthusiastic that their fervor beats back any skeptics who dare to bet against your ventures, even as you pitch more and more fantastical ideas. At this point you hit the flywheel: Other investors, searching for outsize returns, flock to the shares of your other companies, pushing their valuations ever higher, thus fortifying your wealth and burnishing your reputation as a business mastermind.

If you’re lucky, this happens when investors are dreaming of alternatives to the poor returns available when interest rates are ridiculously low, magical thinking about the power of technology suppresses any worry about the risks of problems down the line and retail markets are turning stock trading into something more akin to online gambling.

Understanding this cult requires one to rethink what one knows about finance. Financial purists like to think of financial markets as neutral arbiters that merely record the value-creating activities of entrepreneurs. Financial pragmatists understand that prices need not always reflect value, as behavioral finance has demonstrated. But what if entrepreneurs can capitalize on these dynamics to manufacture fortunes and political power?

This trick is precisely what Mr. Musk has mastered. His messianic status, which was birthed in the explosion of social media, created a powerful cycle of outsize returns on ventures that lead to investors providing him with more and cheaper capital to diversify his empire that, in turn, attracts yet more investors fearful of missing out. Skyrocketing Tesla shares have made fans and investors so devoted that all he has to do is mention a new ambition to goad them into buying even more. And the larger the stated ambition, the more wealth and power they hand him. So why not try for Mars? The final step in this process is to consolidate power in the political sphere to ensure that the outsize ambitions can be nourished forever. If Mr. Musk had played it well, his empire might have been impregnable.

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