this post was submitted on 01 Apr 2025
82 points (98.8% liked)
Economics
714 readers
229 users here now
founded 2 years ago
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
It has so much further to fall. Tesla is still wildly overvalued.
Yes, one thing people are ignoring in terms of the political stuff is that Tesla is just plain overwhelmingly overvalued. It still has a greater market cap than most other car companies combined, but it's a barely profitable fairly low volume manufacturer. It has just a couple models, and other manufacturers have just one model of many which sell as many and then they also have entire business lines Tesla doesn't. Even Tesla's core auto business is only "profitable" due to government incentives such as green credits, and it isn't obvious they're guaranteed to continue.
I saw a video this week suggesting that stocks have 2 modes: "voting machine" and "weighing machine", and while Tesla has been winning the irrational "voting machine" game for a long time, it's probable the game will change at some point and it'll mean a huge reduction in market cap because the company isn't sanely valued.
Unlike a lot of people who flipped because the media told them to (or because they like or don't like his current politics), I've been telling the same story for years, because it was true, is true, and likely will continue to be true in the near future.
I blame the rise of internet stocks. There were a few companies, like Google, Amazon and Facebook/Meta, that if you got in on the ground floor of them you became insanely rich, you got so much money that economically it became a good idea to speculate on lots of little companies. It's distorted a lot of economic realities.
Tesla has been in that mode for a long while, and it's largely still there despite everything. And if Musk hadn't blown his own company up, it might even have paid out in the end. Tesla was the only company seriously making electric cars for a good while, they had a strong lead on everyone else, and they had their charger network. That's a lead that Musk's recent actions has foolishly squandered—really, foolishly doesn't seem like it's a strong enough word. It's an unforced error, it's an own goal, it's Musk just handing his company's lead to his competitors.
Tesla's implosion may be the beginning of a new age of sober realism in corporate governance. Imagine stockholder meetings where executives are asked, "You aren't going to Musk this up, are you?"