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Bottom line: Tesla has no actual product to justify the stock's sky high price. GM, Ford, Toyota etc. all have a price to earning ratio (P/E) of less than 10.

Bottom line: Tesla has no actual product to justify the stock's sky high price. GM, Ford, Toyota etc. all have a price to earning ratio (P/E) of less than 10. Tesla has a P/E of 120. But, but, but --- Tesla is more than just an auto manufacturer. Again, there is little in the way of actual product to justify this viewpoint. 90 percent of their income is from autos. But, but, but --- Tesla is a "growth stock" with huge future potential. Again, the actual data shows otherwise. Sales in 2024 actually declined. The only reason Tesla has a P/E of 120 is because the so called "smart money" (aka institutional investors) remain bought into Musk's fantasy in a big way. Musk's best skill is con artistry and Wall Street is one of his biggest marks.

JumpCrisscross 2y ago
Hell, even Tesla’s leadership knows the Robotaxi is—at best—a minor profit centre if it works [1]. [1] https://www.theinformation.com/articles/electric-inside-tesla-analysts-predicted-robotaxi-lose-money https://www.theinformation.com/articles/electric-inside-tesl...
_DeadFred_ 2y ago
90% of their income isn't DIRECT auto sales though. Q4 2024 30% of that 'auto income' is selling credits. In Q4 2024, Tesla recorded a $600 million gain from revaluing its Bitcoin holdings In Q4 2024 alone, Tesla earned $692 million from selling regulatory credits or carbon credits, accounting for nearly 30% of its quarterly net income of $2.33 billion. Tesla better hope Trump doesn't move away from 'environmental credits' rules. Probably won't happen, Trump seems pretty green focused. https://carboncredits.com/teslas-carbon-credit-revenue-soars-to-2-76-billion-amid-profit-drop/ https://carboncredits.com/teslas-carbon-credit-revenue-soars...
- _DeadFred_ 2y ago
  All that to say Tesla's current income is much more vulnerable than just to auto sales.
spiderfarmer 2y ago
Those institutional investors deserve to lose every penny if they truly believe AI and robotics are going to justify that valuation. Musk and the investors are just keeping up appearances to avoid losing their money. And he appears to be out of ideas for futuristic projects, judging by his recent, overly generic promise of “abundance”.
- jqpabc123 2y ago
  But, but, but --- AI and robotics. Again, Telsa has no real product to show that they can do AI and robotics any better than they do autos. It's pure wishful thinking at this point. But, but, but --- robotaxis. Ditto --- same as above. The really ominous "death cross" signal for Tesla --- their sales are declining (down 9% last quarter in the US) while EV sales overall continue to grow at a robust pace (up 11% last quarter in the US). In other words, the competition is eating Tesla's lunch. But for some less than obvious reason, Wall Street continues to favor fantasy over facts. https://www.businessinsider.com/tesla-sales-slump-automakers-winning-gm-vw-byd-2025-4?op=1 https://www.businessinsider.com/tesla-sales-slump-automakers...
- pfannkuchen 2y ago
  Is the valuation really based on AI and robotics? The legacy automakers have been stagnant innovation-wise for a long, long time. Tesla builds their own equipment to build the cars, which gives them an advantage in design flexibility. They could (or could have) conceivably eat(en) the market share of many of the legacy automakers before they could possibly catch up. I feel like most of the valuation is and was speculation in that direction. It’s not the existing auto makers to compare them to, it’s the entire auto market. Unfortunately Elon can’t stay focused and thinks he can solve every major problem in parallel himself. I hope the board can at some point realize that he needs to take a break from Tesla, and later come back if and when he can focus.
  - jqpabc123 2y ago
    It’s not the existing auto makers to compare them to, it’s the entire auto market. 2023 was Tesla's best year. They sold just under 2 million vehicles --- about 12% of the global total of 14 million EVs sold. Earlier this year, Tesla's market cap peaked at over $1.5 trillion --- more than virtually all the major auto manufacturers in the world COMBINED. Since then, Tesla has lost more than 50% of this outrageous market cap --- and what remains still defies reasonable justification based on actual product and market performance. Even the most optimistic projections suggest it will be another decade before EVs take a majority of auto sales. So even if you assume Tesla will own 100% of the EV market (instead of 12%) for the next decade, you still can't justify their current outrageous stock price.
buyucu 2y ago
If Tesla was priced based on how the company was doing, it would have been somewhere around 30-50$ per share. And I'm being very generous. And this is before all the politics and crash in sales due to Elon's antics.
- otterley 2y ago
  I believe this too, but I’m also pretty nervous about trying to cash in my beliefs by selling it short or buying put options. The old adage “the market can remain irrational longer than you can remain solvent” still holds true.
  - buyucu 2y ago
    I will never ever short Tesla while Trump is in office. I give it a large probability that there will be a large Tesla handout or bailout by Trump.
  - digianarchist 2y ago
    It’s expensive to hold a long term short position against Tesla. Options expire, leveraged ETFs decay, opportunity cost. I’m sure there are some Michael Burray types that are long on short positions but as a retail investor I can’t do it. The stock has show amazing resilience in face of continuous bad news. To summarise just the recent bad news: - Sales are down 15% in California - Cybertruck production has been reduced in Texas due to poor demand - Two models have been pulled from sale in China - RoboTaxi delayed again, this will probably never ship - Model Y remodel delayed
    - Fade_Dance 2y ago
      You can write put positions against a short position to have a positive carry short. It's not an awful approach when a stock already has fear and high volatility. To step it up a notch you can check the ratio of recent implied to realized volatility, and look at option skew (often Puts are extra expensive relative to calls in times of stress) as well as volatility smile shape (far out of the money tail risks can run very expensive in times of stress). All of that is easy for a retail participant, or I should say, anyone expecting to make money from shorting should probably be able to do the "middle school" stuff like this (brokers like ThinkOrSwim will have this info a few clicks/15 seconds away from typing in the ticker). If you truly know what you are doing, short shops will do things like amplify their exposure and then use software to precisely hedge correlations (short a bank? Long a precise basket of other financials to cancel most of the broad exposure out). For others, the approach above can be nice, because in the case where you are not right about your view but not especially wrong either, the position is just harvesting risk premia which is a proven, core source of return from trading inherent to markets. Of course, if you make a bad bet you're going to get bad results. No avoiding that.
smileysteve 2y ago
The best way to justify that high p/e would be for them to use it to buy out the competition. It costs Tesla ~<6% of market cap (780b) to acquire Ford (40b) or GM (44b) (with a friendly ftc); so for 15% of their shares, that could become the only "American" manufacturer - then they'd probably strip those 2 for parts, end the dealer model, bust the unions, maybe keep a few of the popular models. Some of this might be inevitable anyway, as autos become more expensive (tariffs, inflation, chips, unions), and more reliable (dealer maintenance model, fewer sales)
- jqpabc123 2y ago
  The best way to justify that high p/e would be for them to use it to buy out the competition. I'm not sure he could do that even if he wanted to. Tesla stock is being used as collateral for some of his other adventures --- like Twitter/X.
- jszymborski 2y ago
  I don't know much about A&Ms or frankly business, but it seems kinda strange that this hasn't happened yet. We got the Stellantis Car borg before the Tesla car borg.
- pengaru 2y ago
  Wouldn't Big Auto have to be bankrupt for Tesla to not inherit all the contractual/regulatory baggage holding Big Auto back? If the US hadn't bailed out Big Auto then maybe someone like Tesla would have been able to pick up the usable parts for pennies on the dollar. But as things stand today, why would Tesla want Big Auto's problems?
  - technofiend 2y ago
    You spin off a company with all those obligations and pay it a pittance to take them on as supposed assets, soon after it declares bankruptcy. Now your new megacorp is free of all those pesky contracts.
butterlettuce 2y ago
Does Toyota, GM, Ford have an FSD that’s just as good? I’ll wait. They don’t? Do they have charging stations all over the country? I’ll wait. They don’t? FSD, charging stations, and the upcoming CyberCabs are Tesla’s moat, hence the stonk price.
- _DeadFred_ 2y ago
  Tesla gutted their charging station team, then tried (or made public appearances of trying) to reverse their action. Doesn't sound like corporate thinks charging stations are a strength. https://www.kbb.com/car-news/report-tesla-rehiring-laid-off-charger-team/ https://www.kbb.com/car-news/report-tesla-rehiring-laid-off-...
- jqpabc123 2y ago
  Does Toyota, GM, Ford have an FSD that’s just as good? Bad question --- Tesla doesn't actually have FSD. What they actually have is Level 2 automation that requires constant supervision just like the others. Do they have charging stations all over the country? Yes, they do. They are all adapting to use Tesla chargers. https://www.motortrend.com/features/tesla-nacs-charging-port-automaker-compatibility/ https://www.motortrend.com/features/tesla-nacs-charging-port... FSD, charging stations, and the upcoming CyberCabs are Tesla’s moat, hence the stonk price. FSD is fake news, charging stations are now open and Cybercabs are pure wishful thinking. In other words, Tesla has no real moat --- and market data shows it.

JumpCrisscross 2y ago

Hell, even Tesla’s leadership knows the Robotaxi is—at best—a minor profit centre if it works [1]. [1] https://www.theinformation.com/articles/electric-inside-tesla-analysts-predicted-robotaxi-lose-money https://www.theinformation.com/articles/electric-inside-tesl...

_DeadFred_ 2y ago

90% of their income isn't DIRECT auto sales though. Q4 2024 30% of that 'auto income' is selling credits. In Q4 2024, Tesla recorded a $600 million gain from revaluing its Bitcoin holdings In Q4 2024 alone, Tesla earned $692 million from selling regulatory credits or carbon credits, accounting for nearly 30% of its quarterly net income of $2.33 billion. Tesla better hope Trump doesn't move away from 'environmental credits' rules. Probably won't happen, Trump seems pretty green focused. https://carboncredits.com/teslas-carbon-credit-revenue-soars-to-2-76-billion-amid-profit-drop/ https://carboncredits.com/teslas-carbon-credit-revenue-soars...

_DeadFred_ 2y ago
All that to say Tesla's current income is much more vulnerable than just to auto sales.

spiderfarmer 2y ago

Those institutional investors deserve to lose every penny if they truly believe AI and robotics are going to justify that valuation. Musk and the investors are just keeping up appearances to avoid losing their money. And he appears to be out of ideas for futuristic projects, judging by his recent, overly generic promise of “abundance”.

jqpabc123 2y ago
But, but, but --- AI and robotics. Again, Telsa has no real product to show that they can do AI and robotics any better than they do autos. It's pure wishful thinking at this point. But, but, but --- robotaxis. Ditto --- same as above. The really ominous "death cross" signal for Tesla --- their sales are declining (down 9% last quarter in the US) while EV sales overall continue to grow at a robust pace (up 11% last quarter in the US). In other words, the competition is eating Tesla's lunch. But for some less than obvious reason, Wall Street continues to favor fantasy over facts. https://www.businessinsider.com/tesla-sales-slump-automakers-winning-gm-vw-byd-2025-4?op=1 https://www.businessinsider.com/tesla-sales-slump-automakers...
pfannkuchen 2y ago
Is the valuation really based on AI and robotics? The legacy automakers have been stagnant innovation-wise for a long, long time. Tesla builds their own equipment to build the cars, which gives them an advantage in design flexibility. They could (or could have) conceivably eat(en) the market share of many of the legacy automakers before they could possibly catch up. I feel like most of the valuation is and was speculation in that direction. It’s not the existing auto makers to compare them to, it’s the entire auto market. Unfortunately Elon can’t stay focused and thinks he can solve every major problem in parallel himself. I hope the board can at some point realize that he needs to take a break from Tesla, and later come back if and when he can focus.
- jqpabc123 2y ago
  It’s not the existing auto makers to compare them to, it’s the entire auto market. 2023 was Tesla's best year. They sold just under 2 million vehicles --- about 12% of the global total of 14 million EVs sold. Earlier this year, Tesla's market cap peaked at over $1.5 trillion --- more than virtually all the major auto manufacturers in the world COMBINED. Since then, Tesla has lost more than 50% of this outrageous market cap --- and what remains still defies reasonable justification based on actual product and market performance. Even the most optimistic projections suggest it will be another decade before EVs take a majority of auto sales. So even if you assume Tesla will own 100% of the EV market (instead of 12%) for the next decade, you still can't justify their current outrageous stock price.

buyucu 2y ago

If Tesla was priced based on how the company was doing, it would have been somewhere around 30-50$ per share. And I'm being very generous. And this is before all the politics and crash in sales due to Elon's antics.

otterley 2y ago
I believe this too, but I’m also pretty nervous about trying to cash in my beliefs by selling it short or buying put options. The old adage “the market can remain irrational longer than you can remain solvent” still holds true.
- buyucu 2y ago
  I will never ever short Tesla while Trump is in office. I give it a large probability that there will be a large Tesla handout or bailout by Trump.
- digianarchist 2y ago
  It’s expensive to hold a long term short position against Tesla. Options expire, leveraged ETFs decay, opportunity cost. I’m sure there are some Michael Burray types that are long on short positions but as a retail investor I can’t do it. The stock has show amazing resilience in face of continuous bad news. To summarise just the recent bad news: - Sales are down 15% in California - Cybertruck production has been reduced in Texas due to poor demand - Two models have been pulled from sale in China - RoboTaxi delayed again, this will probably never ship - Model Y remodel delayed
  - Fade_Dance 2y ago
    You can write put positions against a short position to have a positive carry short. It's not an awful approach when a stock already has fear and high volatility. To step it up a notch you can check the ratio of recent implied to realized volatility, and look at option skew (often Puts are extra expensive relative to calls in times of stress) as well as volatility smile shape (far out of the money tail risks can run very expensive in times of stress). All of that is easy for a retail participant, or I should say, anyone expecting to make money from shorting should probably be able to do the "middle school" stuff like this (brokers like ThinkOrSwim will have this info a few clicks/15 seconds away from typing in the ticker). If you truly know what you are doing, short shops will do things like amplify their exposure and then use software to precisely hedge correlations (short a bank? Long a precise basket of other financials to cancel most of the broad exposure out). For others, the approach above can be nice, because in the case where you are not right about your view but not especially wrong either, the position is just harvesting risk premia which is a proven, core source of return from trading inherent to markets. Of course, if you make a bad bet you're going to get bad results. No avoiding that.

smileysteve 2y ago

The best way to justify that high p/e would be for them to use it to buy out the competition. It costs Tesla ~<6% of market cap (780b) to acquire Ford (40b) or GM (44b) (with a friendly ftc); so for 15% of their shares, that could become the only "American" manufacturer - then they'd probably strip those 2 for parts, end the dealer model, bust the unions, maybe keep a few of the popular models. Some of this might be inevitable anyway, as autos become more expensive (tariffs, inflation, chips, unions), and more reliable (dealer maintenance model, fewer sales)

jqpabc123 2y ago
The best way to justify that high p/e would be for them to use it to buy out the competition. I'm not sure he could do that even if he wanted to. Tesla stock is being used as collateral for some of his other adventures --- like Twitter/X.
jszymborski 2y ago
I don't know much about A&Ms or frankly business, but it seems kinda strange that this hasn't happened yet. We got the Stellantis Car borg before the Tesla car borg.
pengaru 2y ago
Wouldn't Big Auto have to be bankrupt for Tesla to not inherit all the contractual/regulatory baggage holding Big Auto back? If the US hadn't bailed out Big Auto then maybe someone like Tesla would have been able to pick up the usable parts for pennies on the dollar. But as things stand today, why would Tesla want Big Auto's problems?
- technofiend 2y ago
  You spin off a company with all those obligations and pay it a pittance to take them on as supposed assets, soon after it declares bankruptcy. Now your new megacorp is free of all those pesky contracts.

butterlettuce 2y ago

Does Toyota, GM, Ford have an FSD that’s just as good? I’ll wait. They don’t? Do they have charging stations all over the country? I’ll wait. They don’t? FSD, charging stations, and the upcoming CyberCabs are Tesla’s moat, hence the stonk price.

_DeadFred_ 2y ago
Tesla gutted their charging station team, then tried (or made public appearances of trying) to reverse their action. Doesn't sound like corporate thinks charging stations are a strength. https://www.kbb.com/car-news/report-tesla-rehiring-laid-off-charger-team/ https://www.kbb.com/car-news/report-tesla-rehiring-laid-off-...
jqpabc123 2y ago
Does Toyota, GM, Ford have an FSD that’s just as good? Bad question --- Tesla doesn't actually have FSD. What they actually have is Level 2 automation that requires constant supervision just like the others. Do they have charging stations all over the country? Yes, they do. They are all adapting to use Tesla chargers. https://www.motortrend.com/features/tesla-nacs-charging-port-automaker-compatibility/ https://www.motortrend.com/features/tesla-nacs-charging-port... FSD, charging stations, and the upcoming CyberCabs are Tesla’s moat, hence the stonk price. FSD is fake news, charging stations are now open and Cybercabs are pure wishful thinking. In other words, Tesla has no real moat --- and market data shows it.