Tesla has unveiled cheaper models of two of its most popular cars in the US as it tries to boost sales on the heels of the expiration of a key US tax credit.
But the carmaker’s shares tumbled about 4% as investors were underwhelmed by the announcement. In the US, the new versions of its Model Y mid-sized sport utility vehicle and Model 3 sedan are priced only $5,000 less than previous versions.
Tesla, which faces growing competition, has lost ground as it has been slow to offer new, more affordable vehicles, despite its release of a new Model Y version this year.
TSLA is up 15% YTD and up 70% since this time last year.
At this point I think it’s clear that Tesla’s share price is entirely irrational. Their sales are down globally, they’re facing a government in the US that’s openly hostile to EVs, a market in the EU that openly detests their products because their CEO is a Nazi, and in China they’re being destroyed by cheaper competitors.
Even if they were a successful car company with clear skies and open road ahead of them, that would not justify their share price. Tesla’s market cap is 1.44tn. Toyota’s is 262bn. There is no sane world where Tesla’s car business is worth 5½ times Toyota’s.
Investors are, at best, pricing Tesla on the notion that their self driving tech is where the real money is at, but even that is entirely irrational because Waymo are destroying them on a self driving. Tesla have over promised and under delivered on self driving for years, and have little more than lawsuits to show for it, while their competition have been solving all the problems they still struggle with.
Which leaves us with the conclusion that investors are really just pricing Tesla on vibes, and perhaps on the broader bet that one of the richest men in the world will always succeed in keeping the main source of his wealth from collapsing. Basically the only argument for betting on this company that I can see is that it’s too big to fail in a world this corrupt.
Tesla isn’t even #4 on full self driving. When Ford pulled out of the game, they were way ahead of Tesla, but they deemed the investment wouldn’t begin to see payback in a decade. Probably because they realized the risks that are only now catching up to Tesla, in the form of trials about product responsibility for FSD and Autopilot.
Makers that are clearly ahead of Tesla are Waymo, GM (Cruise subsidiary), Mercedes.
Although Cruise subsidiary of GM was shot down due to incidents, GM decided a couple of months ago to renew the program for private cars.
All shares are not tied to reality anymore. The rich have enough of the money as long as they keep circling it among themselves the stock goes up. Look at COVID economies worldwide down but stocks kept going up.
Or maybe it’s just the largest ponzi scheme in history
How would this be a Ponzi scheme, specifically?
Tesla is propped by retail investors. People who do not understand how to value a stock. More than twice as many retail investors as other stocks.
Using a very rough definition of ponzi scheme, any company trading this high above book value is one.
There is nothing in the fundamentals that moves the price. It’s all retail investor sentiment.
Emotional traders are exploitable traders. The insitutional investors are taking advantage of the situation and will be the first to get out because they control the game.
As you said, it is so unbelievably overpriced that market forces don’t come close to explaining it. Low level investors pump it full of money, and the top people get out before it all crashes like a Tesla in self-driving mode.
Technically pump and dump is not the same as a ponzi scheme, but it takes longer to explain.
Repeated pump and dump with the Tesla board members continously sell shares in large chunks cashing out of Tesla. That wouldn’t be something you do if you think its going to the moon.
Tesla board members, executive sell off over $100 million of stock in recent weeks [March2025]
I didn’t say anything prior to my question.
Tesla’s P/E ratio is simply insane. There is nothing to prop that up, IMHO. It is like you said, it’s all vibes and cope.
I wonder if the collapse will be something like Enron’s.
Lots of people forget that Tesla is much more than cars at this point. Musk now claims it’s an AI company, but aside from that vaporware they also build & sell utility grade battery storage systems for electric grids, Powerwall batteries for home solar systems, vehicle insurance for the cars they sell, etc. They also run virtual power plants for electric utilities that consist of Powerwall owners who opt-in to the program and are paid a premium for the power they supply. Just a month or so ago they tested a VPP in California that consisted of 100,000 individual PowerWalls.
And then there’s their attempt at robotics…
All of which amounts to a company that, in a serious world, would have maybe a fifth of their current valuation. I’m not saying that Tesla are worthless, just that their stock price is entirely disconnected from reality.
and yet, none of that actually makes money, and the stans keep buying.