Will Elon Musk’s emails with Jeffrey Epstein derail his very important year?

Last week, the Justice Department released a trove of documents related to its case against Jeffrey Epstein, its largest to date. Among the millions of records were numerous mentions of Elon Musk. A search of Musk’s name in the department’s database returns at least 1,500 results.

Since the release, Musk has been — what else? — posting on his site, defending his correspondence with Epstein on his social media platform, X. Musk said he had “very little correspondence” with Epstein and “refused repeated invitations” to visit Epstein’s island, despite emails showing he had been in contact with Epstein in 2012 and 2013, at one point asking him, “What day/night will be the wildest party on your island?” Epstein even offered to send a helicopter to bring Musk to the island.

It is unclear whether Musk has ever arrived on the island, and he has not been accused of any wrongdoing related to Epstein. But these revelations certainly fly in the face of Musk’s past denials that he “REFUSED” the convicted sex offender’s invitations, as do his clumsy efforts at damage control now that the truth has come out.

Certainly, Musk is that rare executive who seems financially immune to his many controversies. He has endured defamation lawsuits, wrongful death lawsuits, sexual misconduct allegations, rumors of drug use, and more. – and all the while, his net worth continues to rise.

But there’s no doubt that news of the Epstein emails comes at a very inopportune time for Musk, who currently finds himself in the midst of several highly sensitive, high-stakes business transactions, including a possible IPO and an attempted merger of at least two of his companies. SpaceX is preparing for a possible record public offering later this year. And last week, Reuters reported that Musk wants to merge his rocket and telecommunications company with xAI. (As of this article’s publication, the merger has been officially announced.)

News that Musk requested an invitation to Epstein’s island could “hurt his image” with investors, said Ann Lipton, a professor of corporate governance at the University of Colorado Law School. And since much of Musk’s success depends on the optimism he generates among investors, a “breach” in that optimism could hurt his efforts to secure a historic IPO for SpaceX.

“But I think the biggest risk to his businesses is what we would call ‘distraction costs’: He seems to spend a lot of time trying to refute allegations that he was involved with Epstein, and that in itself could be a cause for concern for investors,” Lipton said in an email.

Musk has faced criticism over how he chooses to spend his time before. In 2022, hundreds of SpaceX employees signed a letter saying that Musk’s behavior had become an embarrassment and distraction to the company. (At the time, the billionaire was in the midst of his doomed effort to walk away from his bid to buy Twitter.) Last year, Tesla shareholders approved a $1 trillion pay package for Musk that aimed to move him away from DOGE and his work for the Trump administration, and back to the electric vehicle company.

The SpaceX IPO currently represents the biggest risk for Musk, said Gregory Shill, a law professor and corporate governance expert at Arizona State University. The public offering disclosure process is intensive and subject to scrutiny by the Securities and Exchange Commission, in addition to private litigants. Any misrepresentation or omission carries numerous legal risks for SpaceX – and by extension, Musk. But it can mitigate those risks by “inserting an appropriate risk factor into the S-1,” including “key person risk” related to Musk himself, Shill said.

If further revelations from Epstein emerge, Musk could find himself facing more serious consequences. Of course, whether someone with proven ties to Epstein faces consequences for their actions often depends on which political party is in power. For example, former Treasury Secretary Larry Summers resigned from several important positions, including from the board of directors of OpenAI, following the publication of his emails with Epstein. Prince Andrew has been stripped of his royal titles. Bill and Hillary Clinton are currently facing a contempt vote in Congress after rejecting a subpoena to testify in a bipartisan investigation into Epstein.

Of course, the Clintons’ party is no longer in power in Washington, while Musk’s is. No Republicans asked Musk, who is a major political donor, to further explain his contacts with Epstein. The only calls are coming from inside the house, or rather from Musk’s own

It’s extremely rare that Musk’s controversial behavior ends up harming him financially. He remains the richest man in the world, even as Tesla’s sales and profits continue to fall. Investors continue to buy and sell shares of his companies, despite his well-documented history of racist comments and conspiracy propaganda. He gave a Nazi salute at Donald Trump’s inauguration: Tesla’s stock price rose nearly 11% in the 12 months following the high-profile gesture.

Perhaps this controversy, like most of the controversies that preceded it, is simply baked into the price at this point.

“I suspect,” Lipton said, “that without further disclosures, investors will treat this as part of the background noise that accompanies any Elon Musk investment.”