# Why is Tesla's market cap so high? **URL:** \ **Category:** Great Debates\ **Created:** [December 13, 2024, 6:09am UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594 "2024-12-13T06:09:38Z")\ **Posts on this page:** 20\ **Page:** 7
**Author:** ![Ash\_trav511](https://avatars.discourse-cdn.com/v4/letter/a/edb3f5/32.png) [@Ash\_trav511](https://boards.straightdope.com/u/Ash_trav511)\ **Post date:** [December 20, 2024, 4:52am UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/121 "2024-12-20T04:52:48Z")
> **[Elon Musk Reportedly Told TSMC's Chairman In A Recent Secret Meeting That...](https://wccftech.com/elon-musk-reportedly-told-tsmcs-chairman-in-a-recent-secret-meeting-that-optimus-robots-not-cars-are-teslas-future/)** > > To allay Elon Musk's apprehensions, Wei purportedly provided the assurance that TSMC would provide as many Dojo chips as Tesla could pay for. Musk says robotics is Tesla future, cars secondary. > **[Tesla China VP and Full Self Driving Nearing China Release | NextBigFuture.com](https://www.nextbigfuture.com/2024/12/tesla-china-vp-and-full-self-driving-nearing-china-release.html)** > > All indications are that the Tesla FSD (Full self driving) software stack is running on chinese cars to provide actually smart summon and dispatch. This [https://www.reddit.com/r/Switzerland/comments/1hdbl5t/switzerland\_greenlights\_use\_of\_selfdriving\_cars/](https://www.reddit.com/r/Switzerland/comments/1hdbl5t/switzerland_greenlights_use_of_selfdriving_cars/) ---
**Author:** ![andrewm](https://avatars.discourse-cdn.com/v4/letter/a/c57346/32.png) [@andrewm](https://boards.straightdope.com/u/andrewm)\ **Post date:** [January 2, 2025, 11:25pm UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/122 "2025-01-02T23:25:09Z")
It’s worth about 10% less now than it was when the thread was started, after several consecutive days of declines including a 6% drop today on the news that their year-over-year sales declined (by over 1%) for the first time since 2015. > **[Tesla Sales Drop Year-Over-Year For First Time In Decade, Almost Loses EV...](https://www.theautopian.com/tesla-sales-drop-year-over-year-for-first-time-in-decade-almost-loses-ev-sales-crown-to-byd/)** > > A drop in global Tesla deliveries in 2024 and a surge in BYD EV sales has increased pressure on the world's biggest BEV brand. ---
**Author:** ![Ash\_trav511](https://avatars.discourse-cdn.com/v4/letter/a/edb3f5/32.png) [@Ash\_trav511](https://boards.straightdope.com/u/Ash_trav511)\ **Post date:** [January 4, 2025, 2:52am UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/123 "2025-01-04T02:52:40Z")
Hmmm Tesla share price rebounded again to 410.06 ---
**Author:** ![Dr.Strangelove](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dr.strangelove/32/6613_2.png) [@Dr.Strangelove](https://boards.straightdope.com/u/Dr.Strangelove)\ **Post date:** [January 5, 2025, 12:40am UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/124 "2025-01-05T00:40:40Z")
Their grid battery sales are doing well. From 3.2 GWh to 11 GWh year-over-year. The _total_ shipped in 2023 was 14.7 GWh; today they’re nearly doing that in one quarter. The slight decline in sales is unfortunate but they’re in the process of retooling for the Model Y refresh. There may be some people waiting for that. Also, I’m not sure that they even had the cars to sell much more of–although they delivered 496k, they only produced 459k (again due to the retooling). The market response is hard to predict, as always. ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [March 10, 2025, 7:38pm UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/125 "2025-03-10T19:38:00Z")
> [@Ash\_trav511](#): > > Hmmm Tesla share price rebounded again to 410.06 As of March 10th, its currently sitting at 223 a share. However thats still highly overvalued, and about what Tesla was worth in October of 2024, before the election results. Tesla sales are about 1/3 in the US, 1/3 in China, and the other 1/3 in various other western nations. Their sales seem to have hit a cap at about ~2 million units annually while sales of Chinese made EV sales are growing dramatically. Tesla is a pariah in the west, and in China their domestically made EVs are better and cheaper than Tesla. So Tesla future sales don’t look good. Who are they going to sell to? Western nations who view them as the corporate arm of a drug addicted, mentally unstable Nazi, or Chinese markets where Tesla is more expensive and has fewer options than Chinese made EVs? Despite it all, Tesla stock, even at 223 a share, is still probably 5x higher than it should be. The P/E ratio is still 109. They do not have much of a future in EVs. Other AI companies are ahead of them. There are endless companies working on bipedal robotics and renewable energy. ---
**Author:** ![hajario](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hajario/32/171_2.png) [@hajario](https://boards.straightdope.com/u/hajario)\ **Post date:** [March 10, 2025, 7:41pm UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/126 "2025-03-10T19:41:47Z")
It’s down 41% year to date and dropping. The S&P is down 4.3% in that same timeframe. We haven’t seen near the bottom yet. ---
**Author:** ![Happy\_Fun\_Ball](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/happy_fun_ball/32/17664_2.png) [@Happy\_Fun\_Ball](https://boards.straightdope.com/u/Happy_Fun_Ball)\ **Post date:** [March 12, 2025, 5:49am UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/127 "2025-03-12T05:49:59Z")
Did you guys see this from Jalopnik? [Tesla Gamed The System To Steal Tens Of Millions In Canadian Incentives On The Final Day Of Eligibility](https://www.jalopnik.com/1807796/tesla-last-minute-canadian-incentives-eligibility-request/) ---
**Author:** ![Mijin](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mijin/32/9369_2.png) [@Mijin](https://boards.straightdope.com/u/Mijin)\ **Post date:** [March 15, 2025, 11:35am UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/128 "2025-03-15T11:35:28Z")
I don’t know why @Ash_trav511 got banned, but it’s interesting to hear the alternative perspective. As (s)he isn’t here to respond, I will address the case for Tesla not being overvalued in the general sense. The argument is basically that Tesla is a _potential leader in AI and self-driving_, and this is why TSLA stock is appropriately priced. The counter-arguments as I see it are: 1. Musk has a long track record of promising new tech that never sees the light of day, or is delivered much later and more rudimentary than promised. 2. Being a leader in AI is far from that simple. Many companies around the world are investing tens of billions of dollars and there is no reason to suppose x.ai will come out on top. Additionally, since DeepSeek burst onto the scene with an open source model, the ROI is also not as clear as it once was. 3. Focusing on AI and the like tacitly concedes that Tesla is failing at the bread and butter of being a car company. If it was regularly bringing out new models that the market likes, we would simply be talking about that. 4. Obviously Musk is toxic, but some investors might be pricing in that he will be distancing himself, or even stepping down, at some point. All this being said, the stockmarket is somewhat a form of gambling and so, even accepting the 4 points above, we can make a case for taking a punt on Tesla potentially striking oil on one of its tech explorations. Whether it should be valued _so much_ higher than its current revenue is another matter. IMO it shouldn’t be, and the stock has a lot further to fall. ---
**Author:** ![hajario](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hajario/32/171_2.png) [@hajario](https://boards.straightdope.com/u/hajario)\ **Post date:** [March 15, 2025, 2:18pm UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/129 "2025-03-15T14:18:25Z")
> [@Mijin](#): > > 1. Obviously Musk is toxic, but some investors might be pricing in that he will be distancing himself, or even stepping down, at some point. Or ousted. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [March 15, 2025, 2:28pm UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/130 "2025-03-15T14:28:43Z")
Even if he’s ousted, I don’t see how the current stock price is justified. ---
**Author:** ![dtilque](https://avatars.discourse-cdn.com/v4/letter/d/d6d6ee/32.png) [@dtilque](https://boards.straightdope.com/u/dtilque)\ **Post date:** [March 23, 2025, 2:27am UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/131 "2025-03-23T02:27:33Z")
The CEO calls an all-hands meeting to discourage employees from selling their stock. High muck-a-mucks in the company are selling. I can’t think of a more explicit sell signal. > **[Elon tells Tesla employees not to sell TSLA stock as board and execs are dumping](https://electrek.co/2025/03/21/elon-tells-tesla-employees-not-to-sell-tsla-stocks-board-execs-are-dumping/)** > > At an all-hands meeting last night, Elon Musk stood before Tesla employees and told them to “hang on to their... ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [March 23, 2025, 3:22am UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/132 "2025-03-23T03:22:11Z")
Who is buying the stock though? I don’t understand exactly how stock volume is measured, but its my understanding that Tesla has 3.2 billion shares. Roughly 100 million shares get traded every day. If there are more sellers than buyers, the price goes down. But it seems to have stabilized in the low 200s, which is where it was before the election. But who is buying these shares to keep the price up? I know some people like Musk are holding onto their shares, but Musk has about 400 million shares. Theres still a lot of shares not held by him. Who is buying these 100 million shares a day at $200 to $250 a share? What is their motivation? Tesla’s reputation is destroyed. Sales are falling. Chinese EVs are becoming more competitive. Why are they still pricing the stock what it was in 2021 before all this happened? ---
**Author:** ![hajario](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hajario/32/171_2.png) [@hajario](https://boards.straightdope.com/u/hajario)\ **Post date:** [March 23, 2025, 4:35am UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/133 "2025-03-23T04:35:27Z")
Because obviously they see things differently than you do and think it’s a good bet that the price will go up. Maybe they think that Musk will get canned and if that happens the stock will soar or that the US Government will start buy Teslas for their fleet or that they are set to outperform over the next year or that this is the floor. How successful of a stock trader are you? You should short the stock if they are such idiots. Good luck. ---
**Author:** ![Jas09](https://avatars.discourse-cdn.com/v4/letter/j/d07c76/32.png) [@Jas09](https://boards.straightdope.com/u/Jas09)\ **Post date:** [March 23, 2025, 3:44pm UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/134 "2025-03-23T15:44:19Z")
> [@Wesley\_Clark](#): > > Who is buying these 100 million shares a day at $200 to $250 a share? What is their motivation? There are millions of TSLA purchases every day that are new money entering the market via mutual funds in retirement accounts, or purchases using distributed funds from mutual funds (capital gains and dividends). Many of these are indexed funds, which require a certain amount of TSLA in the fund to match whatever the index says it should be. So the answer to “who is buying?” is lots of people, including myself on many days. These automatic purchases put a bit of a brake on any rapid downward movement, both on the market as a whole and TSLA in particular. If there is a broader market selloff (more than we’ve seen already) or the bigger holders start to sell, then you could see a point where the sell side dwarfs the institutional buyers and the price could fall even faster than it has been. ---
**Author:** ![SunUp](https://avatars.discourse-cdn.com/v4/letter/s/ea5d25/32.png) [@SunUp](https://boards.straightdope.com/u/SunUp)\ **Post date:** [March 23, 2025, 4:39pm UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/135 "2025-03-23T16:39:29Z")
You might also have some buy-side pressure from previously-established shorts taking profits to cover their positions. As far as index funds go, they will sometimes[ try to balance sells with buys and then purchase or sell stock based on the day’s net change to cash positions. ---
**Author:** ![hajario](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hajario/32/171_2.png) [@hajario](https://boards.straightdope.com/u/hajario)\ **Post date:** [March 23, 2025, 4:47pm UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/136 "2025-03-23T16:47:08Z")
Also day traders hoping for small bumps ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [March 23, 2025, 5:42pm UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/137 "2025-03-23T17:42:47Z")
> [@hajario](#): > > Because obviously they see things differently than you do and think it’s a good bet that the price will go up. Maybe they think that Musk will get canned and if that happens the stock will soar or that the US Government will start buy Teslas for their fleet or that they are set to outperform over the next year or that this is the floor. > > How successful of a stock trader are you? You should short the stock if they are such idiots. Good luck. This answer totally ignores all the fundamentals of Tesla. Sales plateaued the last few years and are starting to decline. Tesla can’t compete with chinese EVs unless there are tariffs to block Chinese competition. Chinese EV sales are skyrocketing while Tesla sales are, as I said, plateauing and starting to decline. The P/E ratio of Tesla is totally irrational. Toyota sells 6x more cars and has 4x the profit of Tesla, but Tesla’s market cap is 3x higher than Toyota. Also virtually no one is able to consistently beat the marketplace when it comes to investing. However Tesla stock is down about 40% since when I started this thread, so yay me. I should’ve shorted it in december, looking back. Hindsight is 20/20. All this talk about how Tesla isn’t really a car company, its a technology company, don’t take into account that there are endless other technology companies Tesla has to compete with. ---
**Author:** ![hajario](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hajario/32/171_2.png) [@hajario](https://boards.straightdope.com/u/hajario)\ **Post date:** [March 23, 2025, 6:01pm UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/138 "2025-03-23T18:01:03Z")
Sales didn’t plateau over the last few years. That’s complete bullshit. They peaked in 2023 after dramatically increasing over 2022 and about matched the 2023 number in 2024. We will know for sure soon but Q1 25 will probably be a marked decline between market saturation, retooling for the new Model Y and Musk making the brand toxic. I imagine that’s priced in. They are more than cars though. Their charging network is open to everyone now which is almost pure revenue given that they are already there for Teslas. (Although the fact that the network is open could get someone to choose a non Tesla) As for cars they have a Waymo competitor coming out in the next year-ish and an “economy” car maybe also in a year. I wouldn’t personally trust the timeline but it’s not completely unreasonable. I’m sure as hell not buying Tesla stock but there’s a reasonable case to buy it now. ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [March 23, 2025, 6:38pm UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/139 "2025-03-23T18:38:49Z")
> [@Wesley\_Clark](#): > > However Tesla stock is down about 40% since when I started this thread, so yay me. I should’ve shorted it in december, looking back. Hindsight is 20/20. Hindsight is good, and it shows that you may be looking at the issue backward. Tesla stock doubled after Trump’s election. No possible factual conditions of sales underlay that. The most likely causes were a belief that Must would especially proper under a Trump administration or a more general backing of a Trump economy or a political statement even more generally. Without that unwarranted doubling, Telsa stock would have been level since July of last year. Nobody would be commenting on it more than they were then. As you noted in your OP, Tesla stock was already unrealistically high then and had been for years. Cults are notoriously resistant to facts. And the stock market is never rational over any short term. ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [April 24, 2025, 10:28pm UTC](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594/140 "2025-04-24T22:28:50Z")
So Tesla’s net profits in Q1 2025 declined 71% compared to Q1 of 2024 [Tesla’s net profit nosedives 71% in Q1 | Automotive Dive](https://www.automotivedive.com/news/tesla-net-profit-falls-earnings-elon-musk-q1-2025/746092/#:~:text=Tesla%20reported%20a%2071%25%20year,per%20the%20company's%20earnings%20report). > - Tesla reported a 71% year-over-year decline in Q1 net profit [on Tuesday](https://digitalassets.tesla.com/tesla-contents/image/upload/IR/IR/TSLA-Q1-2025-Update.pdf) as its automotive revenues cratered. > - > - The company’s net income fell from nearly $1.4 billion to just over $400 million, per the company’s earnings report. Automotive revenues fell by a larger sum of $2.4 billion, but the company’s total profit figures were buoyed by some gains in its energy division. > - > - The company cited two factors for its sharp automotive revenue declines: lower vehicle deliveries, which was partly due to retooling efforts to launch the refreshed Model Y across four global factories, as well as reductions in average selling prices. The fact that they’re blaming everything except Musk for this is funny too. People aren’t buying teslas because they don’t want to support a sociopathic nazi. Also Tesla’s Q1 profits of $400 million are misleading. They made $600 million from government subsidies for renewable energy, so if you take those away they actually lost $200 million in Q1. Tesla is only in the black because of government subsidies. But even with that, a company posting 400 million in profits for Q1 having a market cap of 800 billion doesn’t make sense. That means Q1 profits are 0.05% of market cap for the quarter. How is this sustainable? Meanwhile Ford’s net income in Q1 of 2024 was 1.33 billion with a market cap of 40 billion. So Q1 profits in 2024 were 3.3% of market cap. I’m assuming Q1 profits of 2025 will be about the same. Yet the tesla stock price is still 10x what it should be. My assumption is that what people really think is that now that we are experiencing rapid growth in AI capabilities, that Musk (due to his ties with Trump) is going to have an inside track into cutting edge AI programs, companies and budgets and the Tesla stock is a reflection of the belief that Musk has an inside track with AI advances in the future due to his ties with Trump. The tesla reputation is destroyed. Musk spending more time there will only make it worse both because Musk is totally incompetent and inept (he had to have people at his companies whose only job it was to prevent him from fucking things up) and because he is the reason people don’t want to buy his cars. I’m guessing people value the company for 10x what its worth because they think Musk has some inside track on AI when the government under Trump gets involved in AI programs in the coming years. But even with AI, don’t they realize a lot of us don’t want to use AI associated with Musk? I intentionally avoid his AI programs and use other companies because I do not want to help that nazi profit or get ahead in life. [Previous page](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594.md?page=6) [Next page](https://boards.straightdope.com/t/why-is-teslas-market-cap-so-high/1011594.md?page=8)