zen222
23 hours ago
Some light Sunday reading: This Wall Street pro did a deep dive into Tesla — and calls the stock ‘tremendously overpriced.’ The charts show why.
Andrew Dickson
Fri, June 13, 2025 at 9:23 AM AKDT 8 min read
Tesla is anything but a boring stock, I’ll give it that. It is also tremendously overpriced.
The Elon Musk vs. Donald Trump battle sure has captured the news cycle. It is captivating from both sides of the political aisle, and the reaction of Tesla Inc.’s stock TSLA to these headlines has been nothing short of unstable, explosive and precarious.
As a result, there is a big picture about Tesla that many are missing.
Three years ago, fans of Tesla were certainly much more excited about their automotive manufacturing business than they are today. Back then, quick EV adoption appeared inevitable, Tesla had the technological lead and the overwhelming market share lead in EVs.
A great deal has changed since.
First, overall demand for pure battery electric vehicles (BEVs) turned out not to be as high as investors expected. Tesla consequently was forced to cut prices, which pressured margins. Moreover, expected new model launches at Telsa never materialized (or were “delayed”— much like the anticipated debut of Tesla’s robotaxi program earlier this week).
Meanwhile, Musk’s dalliance and subsequent reversal of fortunes with Trump and MAGA simultaneously confused Tesla’s core customer base. In the views of one of our close friends, “Musk attempted to appeal to a F-150 and Ram crowd that hates his cars, while completely losing the Tesla crowd that loved his cars.”
Meanwhile, the amount of U.S. government subsidies that Tesla directly and indirectly receives is staggering. Consequently, Musk may be accelerating pressure on the large subsidies enjoyed by Tesla buyers (federal tax credits, which indirectly go straight into Tesla’s pockets) as well as the subsidies enjoyed by the company directly (in the form of regulatory credits).
Read: Trump kills California ‘EV mandate.’ Why Tesla investors don’t care.
Finally, and at the worst possible time for Tesla, traditional competitors have started ramping up with marketable EVs, and new competitors (especially in China) started developing products too, with tremendous success.
Consequently, the expectations that people had three years ago did not materialize. Not even close. Even the flagship Models 3 and Y have been disappointing, and the Cybertruck has been a disaster.
In June 2022, the investment community expected Tesla to mint more than 3.6 million units of sales in 2025. Today, those expectations are down 45%. Moreover, price cuts have driven Tesla’s average selling prices down by roughly 25%. Taken together, expectations for total Tesla 2025 automotive revenues are down almost 60% in this short period.
And what this meant for the P&L and financials for Tesla have not been good at all. In the table below, you can see how bad the past three years have been. Total revenue expectations for 2025 are down 40%, gross margins are down 34%, operating margins are down 56% and earnings expectations are down 68%.
And how has Tesla stock reacted to the plunging expectations for revenues and earnings? It’s up.
Yes, during this period of severe fundamental deterioration, the stock has risen. And in the euphoria following Trump’s election and Musk’s initial alliance with him, the stock actually approached $490 a share in mid-December.
There’s nothing fundamental justifying the stock’s recent gain. In fact the (terrible) first-quarter numbers suggested the opposite reaction was warranted. How did this happen?
Chalk it up to “thesis drift.” Here’s what that means: Investors, specifically Tesla bulls, three years ago believed in an EV future where Tesla would become the Apple AAPL of automakers, and everyone else would become Nokia, Blackberry or Motorola. Now they don’t even care about Tesla’s auto business.
Today, the story, evidently, is all about Tesla’s AI-enhanced full self-driving (FSD) vehicles and robotaxis, and about Optimus, the humanoid bipedal robot that Tesla is designing. Musk said this week that Tesla’s robotaxi service in Austin will roll out later this month. And this has Tesla fans extremely excited. Never mind that Waymo is already in four cities, including Austin, and is booking 250,000 autonomous rides per week in Austin, Phoenix, San Francisco and Los Angeles. In the mind of a Tesla investor, Waymo, which is owned by Alphabet GOOG GOOGL, doesn’t have the same caliber of code writers that Tesla has. Funny that.
And given Musk’s ability to use social media to drive Tesla stock significantly higher without traditional fundamental justification (some call this “pumping”) you have buyside (institutional) investors reluctant to step in and attempt to make markets efficient by shorting the stock. As a result, there is a strong argument that we don’t have proper “price discovery” for Tesla shares.
And at $320 per share, this is a company experiencing negative sales and earnings growth, trading at an EV/sales of nearly 12x, a 2025 P/E of over 170x, and sporting a $1 trillion market cap.
Let those figures sink in.
Importantly, our view is that the value of the automotive business within Tesla not only represents a small portion of its current market cap — but is worth much less than even we expected a few years ago.
If we compare Tesla’s sales and market cap to that of other auto manufacturers, a picture can be worth a thousand words.
So, what investors must determine going forward is less about the future for Tesla automobile manufacturing and more about the prospects for FSD, robotaxis, energy and other projects in Tesla’s skunkworks — because that is clearly what is driving the share price and market cap.
To start this, we can make a simple determination of what the automobile business is worth. And, by implication, the balance must be these other “Musk Options.” In auto-land, the average P/E for Ford, BMW XE:BMW, Mercedes XE:MBG, GM GM, Renault FR:RNO, Stellantis STLA and Volkswagen XE:VOW is 6.5x. Include Honda JP:7267, Toyota JP:7203 and SAIC CN:600104, it is 7.7x.
If we assume the Tesla automotive business — despite all the deteriorating metrics mentioned above — is a better business and deserving of a higher multiple than each of them (which is debatable), perhaps we can say it should be worth a P/E of 10x. Maybe we could even say 15x.
And at a 2025 P/E of 15x, Tesla’s auto business would have market cap of $100 billion. That is still a heck of a lot, more than any other automaker except Toyota (which generates 5x more sales and Ebitda), and about the same as BYD CN:002594.
And if we assume we are close, that means that the market already values Tesla’s FSD, robotaxis, Optimus and the energy business at roughly $1 trillion. And for the Tesla fans laughing at our valuation of the automotive business, even if Tesla’s automotive business were worth twice that amount (a P/E of 30x), the “Musk option” would be valued at $900 billion.
In other words, Tesla’s share price already assumes — and prices in — a tremendous amount of success for Tesla’s non-automotive manufacturing businesses.
Now, clearly, Waymo, Baidu BIDU, Mobileye MBLY and others have a much different opinion about Tesla’s prospects in autonomous driving and robotaxi profitability. Many industry observers do too. But suppose robotaxis become a thing: who will win? And will there be only one “winner”? Perhaps most importantly, how much is there to win? How much demand will there really be for autonomous vehicles?
It is unfathomable that most people will actually not want to drive their cars. It is incomprehensible that people, outside of big-city commuters who don’t like trains, will want to surrender the experience, enjoyment and responsibility of driving to a machine. In our view, demand may not be as high as some think.
And even if people ultimately do want to have an autonomous vehicle, or are one day forced to do so by government regulators, this isn’t months or even years from now for the majority of drivers. It’ll take decades.
That means we’ll need to discount those future prospects back to the present. And if you are sure that something will be worth $100 in 20 years, and you want to make 15% a year while you wait, then you better not pay much more than about $6 to buy it today. That’s just math.
Finally, if Tesla’s FSD does “win,” and if its software is installed on more than just Ubers/Lyfts/taxis and ride-sharing apps, then how much will consumers pay for the software that makes their cars autonomous?
At the outset, the early adopters will pay whatever price they have to, but we shouldn’t want to make the mistake of extrapolating that (as investors in Tesla’s automotive prospects did). Instead, objectively estimate what things might look like as the technology spreads.
So, the question is this: Will we all want to subscribe to an autonomous-driving software vendor like we do with Apple or Android and our phones? Or will competition eventually force autonomous to be standard for all cars, like cruise control?
How much will that cost? We’re guessing that the price is somewhere between free and expensive. We will find out one day, of course, but in the meantime it appears that Tesla has Mr. Market distracted right now, and he’s ignoring the possibility that Tesla’s share price already reflects the company’s best possible outcome.
https://finance.yahoo.com/news/wall-street-pro-did-deep-215100997.html
zen222
3 days ago
Tesla Fails to Meet June 12 Launch for Its Robotaxis. Is This a Big Red Flag for TSLA Stock?
Earlier this week, Tesla (TSLA) CEO Elon Musk announced that the company’s highly anticipated robotaxi service will launch on June 22 in Austin, Texas, pushing back the previously targeted June 12 date as the electric vehicle maker prioritizes safety protocols.
The tentative launch date comes as Tesla faces intense competition in the autonomous vehicle market, where Alphabet’s (GOOG) (GOOGL) Waymo already operates commercial robotaxi services, conducting 250,000 paid trips weekly across multiple U.S. cities.
Tesla’s cautious approach indicates an acknowledgment of safety concerns surrounding autonomous driving technology. Musk emphasized the EV maker is being “super paranoid about safety,” noting that the launch date could shift if additional testing is needed.
“Tesla’s driverless ‘robotaxis’ could launch in Austin as soon as June 22. But a demo in Austin today showed a $TSLA, manually driven to test its Full Self-Driving system, failed to stop for a child-sized dummy at a school bus—and hit it.”
@cbsaustin @velez_tx— Carl Quintanilla (@carlquintanilla.bsky.social) 2025-06-13T11:28:31.792Z
Tesla Stock Gains Despite FSD Delay
The robotaxi service will begin with a limited rollout of 10 to 20 modified Model Y vehicles equipped with Tesla’s new “Full Self-Driving Unsupervised” technology. Unlike the futuristic CyberCab Tesla plans to produce next year, the initial fleet will consist of existing Model Ys, painted black, with distinctive white “Robotaxi” logos.
Tesla will implement geofencing to restrict the initial operating area of the robotaxis, with company employees remotely monitoring the fleet. This measured approach contrasts with Tesla’s broader ambitions to rapidly scale to thousands of vehicles if the Austin pilot proves successful.
The announcement provided a boost to Tesla shares, helping the stock recover from recent volatility following public disputes between Musk and President Donald Trump that briefly erased more than 14% of its market value.
Tesla’s entry into Austin’s competitive autonomous vehicle landscape positions it against established players, including Waymo, Amazon’s (AMZN) Zoox, and startup Avride. The Texas capital has emerged as a preferred testing ground for self-driving technology due to its robotaxi-friendly state regulations and tech-forward infrastructure.
Despite years of promises about autonomous driving capabilities, Tesla has yet to deliver a vehicle safe for unsupervised operation. Notably, the company’s camera-based approach differs from competitors like Waymo, which rely on sophisticated sensors, including lidar and radar technology.
Safety advocates and anti-Musk groups plan protests coinciding with Tesla's expected launch, citing concerns about the company’s driver assistance features currently marketed as Autopilot and Full Self-Driving.
https://www.msn.com/en-us/autos/news/tesla-fails-to-meet-june-12-launch-for-its-robotaxis-is-this-a-big-red-flag-for-tsla-stock/ar-AA1GFJuq
boston745
3 days ago
Newly released video of fatal Tesla crash prompts federal investigation: 'They are claiming they will be imminently able to do something
In November 2023, a Tesla Model Y swerved into 71-year-old grandmother Johna Story at 65 mph after Johna had exited the front passenger-side door of a Toyota 4Runner, which had come to a stop along with other vehicles as members of her group, including Johna, donned orange reflective safety vests and assisted with a crash just after a curve on Interstate 17.
Johna died, and her family has sued the Model Y's driver, Karl Stock, and Tesla, who both did not respond to Bloomberg's request for comment.
The crash report doesn't specify whether Stock was using the FSD system or tried to take control of his Model Y before the collision. However, NHTSA data shows that Tesla reported the crash to regulators seven months later in accordance with a standing general order that requires automakers to report crashes with engaged driver-assistance systems.
I recall this accident, it was confirmed to be using FSD already so not sure why the article doesnt indicate this leaving room for doubt that it was FSD vs Autopilot. HOwever i do not recall it mentioning that the Tesla swerved into this lady. If it swerved its not a glare vision issue, its a glitch in Teslas as shown in the accident mentioned below.
https://www.msn.com/en-us/autos/news/newly-released-video-of-fatal-tesla-crash-prompts-federal-investigation-they-are-claiming-they-will-be-imminently-able-to-do-something/ar-AA1GC5XW
Tesla On FSD Suddenly Swerves And Crashes Into A Tree, Claims Driver
Autonomous driving may be the future, but the present still has a lot of explaining to do. Especially when cars with so-called “Full Self-Driving” capabilities start careening off the road for no obvious reason.
That said, it’s rare to see what we just have in a newly released set of videos involving a Tesla. According to the title, it shows a crash while running what Tesla calls its autonomous system, Full Self-Driving (Supervised). What’s worse, though, is that it seems to do so without rhyme or reason in broad daylight with no traffic on a straight road.
Exactly as predicted. The list of Teslas behaving this way regardless of what is operating the vehicle is long and bloody. Doesnt matter if its FSD, Autopilot, Professionals, regular, or even intoxicated drivers, when a Tesla malfunctions there is nothing you can do about it!
https://www.carscoops.com/2025/05/tesla-fsd-crash-video-swerve-tree/
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