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Can someone explain Tesla to me, assume I'm an idiot. If Tesla sales are down, the Cybertruck is an unmitigated failure and now they are losing money on insuran

Can someone explain Tesla to me, assume I'm an idiot. If Tesla sales are down, the Cybertruck is an unmitigated failure and now they are losing money on insurance, then why on earth is the Tesla stock not going down? Not only is the stock not going down, it's doing well, up almost 5% year-over-year.

deadbabe 1y ago
From what I gather it’s mostly propped up by people who believe Tesla will be more than just a car company but will instead expand out into some general robotics company. Which is really pretty standard for any tech company whose valuation doesn’t make sense. People are betting the future will be brighter and have more revenue from new products.
testing22321 1y ago
People buy stocks betting on their guess of what will happen in the future. Toyota = safe, predictable, steady ship Tesla = wildly profitable for many for years, but incredible unpredictable. It seems many are still guessing it’s going to go up in the future.
__MatrixMan__ 1y ago
I don't understand it either, but I think it means that more needs to be done. We must establish that tinkering with politics was a good way to scare off investors. These investors are not yet scared enough.
voidspark 1y ago
Tesla stock is extremely volatile. It dropped 56% from the high in december, and is now trading at 40% below the all time high.
- mrweasel 1y ago
  So investors shaw the stock hit 400+ and now they're betting it will do it again?
  - voidspark 1y ago
    It hit 400+ twice already. They are holding it for the long term, like 10 or 20 years, not watching the price move every day.
    - maest 1y ago
      Who's "they"? People/entities holding Tesla are a highly heterogeneous mass.
      - voidspark 1y ago
        The majority of Tesla shares are held by institutional investors, and most of those are passive investors, holding it long term. Tesla is included in multiple index funds, including those tracking the S&P 500 and Nasdaq-100.
        Ekaros 1y ago
        Index funds will sell if the valuation drop... So they only in general prop up market. But I think hedge funds are the real players here. Tesla is one of their successful investments. So placing even more bets there to keep numbers looking good is one possible play...
        voidspark 1y ago
        > Index funds will sell if the valuation drop No. The big index funds fully replicate the index. They will drop Tesla only if Tesla is dropped from the index. Tesla is currently up by 1150% since 2019.
  - Kon-Peki 1y ago
    TSLA is in the S&P 500, which guarantees a certain level of demand. It has met all the criteria for removal (there are 20-30 changes every year, even profitable companies get removed) but obviously won’t be until Musk angers Trump enough for them to have the political cover to do it. When that happens, look out below.
outlace 1y ago
Well one could make the argument that Musk is a short or medium term problem and that in 4 years when Trump is gone everyone will forget about hating on Tesla and it will be a great car company again. Musk is in his 50s and won’t be CEO forever. So if your investment horizon is 10+ years and you don’t predict total company collapse then it might be a bargain time to buy.
- edoceo 1y ago
  By then Rivian will solidify it's position.
- tpm 1y ago
  Great car companies have far lower P/E ratios than Tesla.
- danmaz74 1y ago
  If you remove Musk, though, what is so special about Tesla to justify the super-high P/E ratio?
- arp242 1y ago
  Tesla market cap is currently $959B, shipped 0.5M vehicles in 2024. Toyota is second with $244B and shipped 11M vehicles. Ford shipped 4.4M vehicles and has a market cap of $41B. If I look at [1] then Tesla is worth more than the next 12 or so combined. Nothing about this makes any sense. Maybe ten or fifteen years ago you could have made the argument based on future prospects, but that case is exceedingly hard to make today when there's tons more competition on the EV market. [1]: https://companiesmarketcap.com/automakers/largest-automakers-by-market-cap/ https://companiesmarketcap.com/automakers/largest-automakers...
pfannkuchen 1y ago
Stock market is largely a casino, TSLA is basically a memecoin. It’s annoying because I have a more optimistic view than most on the long term prospects of the company, but this stock behavior makes it hard to place such bets.
- bobthepanda 1y ago
  TSLA was also divorced from normal P/E ratios on stocks a long time ago.
  - pfannkuchen 1y ago
    True, this isn’t a new phenomenon for sure.
deleted 1y ago
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badlucklottery 1y ago
> then why on earth is the Tesla stock not going down? “Markets can remain irrational longer than you can remain solvent.” TSLA's value has never been correlated to the fundamentals of the business. So it continuing to do so isn't super surprising. As long as there's a steady supply of unsavvy investors/future bag-holders willing to buy, it'll keep climbing.
- naijaboiler 1y ago
  This is the answer! It is definitely coming down and will reflect business fundamentals at some point. But please don't try to predict when, or you will lose lots of money. "Market can stay irrational longer than you can remain solvent"
  - deleted 1y ago
    [deleted]
- mint2 1y ago
  At one point Tesla had the opportunity to become THE ev charging monopoly. That ended when Musk went on one of his earlier whimsical firing sprees and destroyed the charging team. Had he instead beefed it up, charging could become a money printing machine. Even with his sabotage of the charging teams, Tesla charging is better than other but it could have been so much more
  - rsynnott 1y ago
    > At one point Tesla had the opportunity to become THE ev charging monopoly. Why would you want to be that, though? The only way to maintain that would be to run it at very low margins; it's hard to imagine a more commodity product and if you have high margins and significant revenue, people will just set up competitors with slightly lower margins.
- sillyfluke 1y ago
  And they will stay even more irrational if the CEO attacking shortsellers becomes the co-president of the United States. It's no surprise that the short-seller Hindenberg Research shut its doors just as the Trump administration was assuming power, as the rest of the country watched on incredulously as Pam Bondi breathlessly bragged about going after a bunch of vandals of Tesla car dealerships as her most impressive accomplishment as DoJ of the USA in the first (?) cabinet meeting with Trump.
api 1y ago
TSLA has never traded in line with fundamentals. If the price wasn't rational then, why should it be rational now? Also note that the CEO has close ties with government, so some people might be betting on Federal contracts or some kind of bailout. I have a hypothesis that the reason Musk went all-in on Trump was because Trump would keep BYD out of the North American market. There's been whispering for years about BYD building plants in NAFTA nations or perhaps even in the USA (like Toyota and Nissan did), and even with significantly higher costs BYD would probably annihilate Tesla. A higher-end US-market mid-priced BYD EV with 300+ miles of range that undercut the model S would be deadly. If we had global free trade with no tariffs China would absolutely dominate this sector as well, at least for mainstream vehicles.
tptacek 1y ago
You'll never get a satisfactory answer, but there's presumably: * some coefficient of meme-stockery (trading in expectation of other people's memetic interest in the stock, like GME) and * some other coefficient of Tesla's long term vision (gigafactories, their distribution system, their place in the market for power delivery, &c). Neither of these would be especially sensitive to Tesla's recent performance; Tesla only has to stay viable for both those payoffs to remain plausible.
bgnn 1y ago
All good answers here. I have one addition: Zero interest rate regime we had since the financial crisis meant the money supply was cheap. It was enough to just hype yourself to the investors to get money, and Tesla did exactly that and got incredible valuation. That cheap money supply dried out, but the high valuation of Tesla became in itself to keep its outlook good, so it's self sustaining so far in a fragile state. Exactly how fragile is it, nobody would know, but typically you need good profits and earnings to be a stable investment. In a world with a lot of viable alternatives and heating up competition, Tesla needs like a monopoly in a technology or market (be it autonomous driving, be it banning all electric cars in Western hemisphere except Teslas by presidential decree) to not be a ticking time bomb.
hshshshshsh 1y ago
Well it's you who thinks stock price is correlated with market performance. It's a subjective take obviously as clearly illustrated by Tesla. Stock price like anything else is just a belief.
deleted 1y ago
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rsynnott 1y ago
I mean, even if none of that were true, the valuation would still make absolutely no sense. If you, as an investor, have decided to make an investment that makes no sense at all based on the fundamentals, why would you turn around and go "the fundamentals I was previously ignoring have gotten somewhat worse, I should sell this"? (Interestingly, people _do_ do this to _some_ extent, though. Notably, Trump's joke of a social media company took a significant temporary hit on releasing bad financials, even though of course the financials are completely irrelevant to the valuation; it has revenue of less than a million per quarter and a market cap of over five billion.)
jjav 1y ago
> If Tesla sales are down, the Cybertruck is an unmitigated failure and now they are losing money on insurance, then why on earth is the Tesla stock not going down? Great question. Tesla's latest quartely report was very negative across the board. Normally stocks tank after a report even half as bad. But Tesla has been on a wild rally since the report came out. No, I can't explain it.

deadbabe 1y ago

From what I gather it’s mostly propped up by people who believe Tesla will be more than just a car company but will instead expand out into some general robotics company. Which is really pretty standard for any tech company whose valuation doesn’t make sense. People are betting the future will be brighter and have more revenue from new products.

testing22321 1y ago

People buy stocks betting on their guess of what will happen in the future. Toyota = safe, predictable, steady ship Tesla = wildly profitable for many for years, but incredible unpredictable. It seems many are still guessing it’s going to go up in the future.

__MatrixMan__ 1y ago

I don't understand it either, but I think it means that more needs to be done. We must establish that tinkering with politics was a good way to scare off investors. These investors are not yet scared enough.

voidspark 1y ago

Tesla stock is extremely volatile. It dropped 56% from the high in december, and is now trading at 40% below the all time high.

mrweasel 1y ago
So investors shaw the stock hit 400+ and now they're betting it will do it again?
- voidspark 1y ago
  It hit 400+ twice already. They are holding it for the long term, like 10 or 20 years, not watching the price move every day.
  - maest 1y ago
    Who's "they"? People/entities holding Tesla are a highly heterogeneous mass.
    - voidspark 1y ago
      The majority of Tesla shares are held by institutional investors, and most of those are passive investors, holding it long term. Tesla is included in multiple index funds, including those tracking the S&P 500 and Nasdaq-100.
      - Ekaros 1y ago
        Index funds will sell if the valuation drop... So they only in general prop up market. But I think hedge funds are the real players here. Tesla is one of their successful investments. So placing even more bets there to keep numbers looking good is one possible play...
        voidspark 1y ago
        > Index funds will sell if the valuation drop No. The big index funds fully replicate the index. They will drop Tesla only if Tesla is dropped from the index. Tesla is currently up by 1150% since 2019.
- Kon-Peki 1y ago
  TSLA is in the S&P 500, which guarantees a certain level of demand. It has met all the criteria for removal (there are 20-30 changes every year, even profitable companies get removed) but obviously won’t be until Musk angers Trump enough for them to have the political cover to do it. When that happens, look out below.

outlace 1y ago

Well one could make the argument that Musk is a short or medium term problem and that in 4 years when Trump is gone everyone will forget about hating on Tesla and it will be a great car company again. Musk is in his 50s and won’t be CEO forever. So if your investment horizon is 10+ years and you don’t predict total company collapse then it might be a bargain time to buy.

edoceo 1y ago
By then Rivian will solidify it's position.
tpm 1y ago
Great car companies have far lower P/E ratios than Tesla.
danmaz74 1y ago
If you remove Musk, though, what is so special about Tesla to justify the super-high P/E ratio?
arp242 1y ago
Tesla market cap is currently $959B, shipped 0.5M vehicles in 2024. Toyota is second with $244B and shipped 11M vehicles. Ford shipped 4.4M vehicles and has a market cap of $41B. If I look at [1] then Tesla is worth more than the next 12 or so combined. Nothing about this makes any sense. Maybe ten or fifteen years ago you could have made the argument based on future prospects, but that case is exceedingly hard to make today when there's tons more competition on the EV market. [1]: https://companiesmarketcap.com/automakers/largest-automakers-by-market-cap/ https://companiesmarketcap.com/automakers/largest-automakers...

pfannkuchen 1y ago

Stock market is largely a casino, TSLA is basically a memecoin. It’s annoying because I have a more optimistic view than most on the long term prospects of the company, but this stock behavior makes it hard to place such bets.

bobthepanda 1y ago
TSLA was also divorced from normal P/E ratios on stocks a long time ago.
- pfannkuchen 1y ago
  True, this isn’t a new phenomenon for sure.

deleted 1y ago

[deleted]

badlucklottery 1y ago

> then why on earth is the Tesla stock not going down? “Markets can remain irrational longer than you can remain solvent.” TSLA's value has never been correlated to the fundamentals of the business. So it continuing to do so isn't super surprising. As long as there's a steady supply of unsavvy investors/future bag-holders willing to buy, it'll keep climbing.

naijaboiler 1y ago
This is the answer! It is definitely coming down and will reflect business fundamentals at some point. But please don't try to predict when, or you will lose lots of money. "Market can stay irrational longer than you can remain solvent"
- deleted 1y ago
  [deleted]
mint2 1y ago
At one point Tesla had the opportunity to become THE ev charging monopoly. That ended when Musk went on one of his earlier whimsical firing sprees and destroyed the charging team. Had he instead beefed it up, charging could become a money printing machine. Even with his sabotage of the charging teams, Tesla charging is better than other but it could have been so much more
- rsynnott 1y ago
  > At one point Tesla had the opportunity to become THE ev charging monopoly. Why would you want to be that, though? The only way to maintain that would be to run it at very low margins; it's hard to imagine a more commodity product and if you have high margins and significant revenue, people will just set up competitors with slightly lower margins.
sillyfluke 1y ago
And they will stay even more irrational if the CEO attacking shortsellers becomes the co-president of the United States. It's no surprise that the short-seller Hindenberg Research shut its doors just as the Trump administration was assuming power, as the rest of the country watched on incredulously as Pam Bondi breathlessly bragged about going after a bunch of vandals of Tesla car dealerships as her most impressive accomplishment as DoJ of the USA in the first (?) cabinet meeting with Trump.

api 1y ago

TSLA has never traded in line with fundamentals. If the price wasn't rational then, why should it be rational now? Also note that the CEO has close ties with government, so some people might be betting on Federal contracts or some kind of bailout. I have a hypothesis that the reason Musk went all-in on Trump was because Trump would keep BYD out of the North American market. There's been whispering for years about BYD building plants in NAFTA nations or perhaps even in the USA (like Toyota and Nissan did), and even with significantly higher costs BYD would probably annihilate Tesla. A higher-end US-market mid-priced BYD EV with 300+ miles of range that undercut the model S would be deadly. If we had global free trade with no tariffs China would absolutely dominate this sector as well, at least for mainstream vehicles.

tptacek 1y ago

You'll never get a satisfactory answer, but there's presumably: * some coefficient of meme-stockery (trading in expectation of other people's memetic interest in the stock, like GME) and * some other coefficient of Tesla's long term vision (gigafactories, their distribution system, their place in the market for power delivery, &c). Neither of these would be especially sensitive to Tesla's recent performance; Tesla only has to stay viable for both those payoffs to remain plausible.

bgnn 1y ago

All good answers here. I have one addition: Zero interest rate regime we had since the financial crisis meant the money supply was cheap. It was enough to just hype yourself to the investors to get money, and Tesla did exactly that and got incredible valuation. That cheap money supply dried out, but the high valuation of Tesla became in itself to keep its outlook good, so it's self sustaining so far in a fragile state. Exactly how fragile is it, nobody would know, but typically you need good profits and earnings to be a stable investment. In a world with a lot of viable alternatives and heating up competition, Tesla needs like a monopoly in a technology or market (be it autonomous driving, be it banning all electric cars in Western hemisphere except Teslas by presidential decree) to not be a ticking time bomb.

hshshshshsh 1y ago

Well it's you who thinks stock price is correlated with market performance. It's a subjective take obviously as clearly illustrated by Tesla. Stock price like anything else is just a belief.

deleted 1y ago

[deleted]

rsynnott 1y ago

I mean, even if none of that were true, the valuation would still make absolutely no sense. If you, as an investor, have decided to make an investment that makes no sense at all based on the fundamentals, why would you turn around and go "the fundamentals I was previously ignoring have gotten somewhat worse, I should sell this"? (Interestingly, people _do_ do this to _some_ extent, though. Notably, Trump's joke of a social media company took a significant temporary hit on releasing bad financials, even though of course the financials are completely irrelevant to the valuation; it has revenue of less than a million per quarter and a market cap of over five billion.)

jjav 1y ago

> If Tesla sales are down, the Cybertruck is an unmitigated failure and now they are losing money on insurance, then why on earth is the Tesla stock not going down? Great question. Tesla's latest quartely report was very negative across the board. Normally stocks tank after a report even half as bad. But Tesla has been on a wild rally since the report came out. No, I can't explain it.