Tesla Is A Car Company. Its Stock Is A Meme
That was Adam Jonas, Morgan Stanley's motoring analyst, kicking off his report. The basic elements are all there: Tesla's vehicle sales, pricing and margins were awful and CEO Elon Musk's various pronouncements were characteristically vague. Yet the stock popped.
Jonas concludes that this dismal quarter was "emblematic of a company in the transition from an automotive 'pure play' to a highly diversified play on AI and robotics". The next day he cut 2025 forecasts for vehicle deliveries, pricing and margins, battery deliveries, and overall earnings. The price target was unchanged at US430 Tesla closed on Friday at about 404 with a market cap of 1.3-trillion.
Dissonance between Tesla's financials and stock price is hardly new, but it has reached new heights. Analysts tasked with covering a car company asking out loud if it is actually a car company signals how unmoored things have become.
Share prices look forward rather than back, so many would argue that despite terrible car sales results, Tesla's vast valuation is justified by future profits on all the tech stuff. Bulls can point to Musk's prior achievements, especially the mainstreaming of those EVs and his non-Tesla endeavors, notably SpaceX.
But you generally discount projected cash flows to reflect the risks. Musk has achieved real things but his track record of making grandiose claims that don't pan out or arrive very late is undeniable. Take autonomous vehicles, where Musk has been touting the imminent arrival of Teslas that could drive themselves coast to coast for the best part of a decade. This has not happened even as rival Waymo has launched actual robo-taxi services in several cities and is now reportedly ready to start testing in 10 more. Tesla bulls are, nonetheless, swooning over Musk saying, yet again, that a real robo-taxi service will arrive soon, in Austin - something that may or may not happen on time and is, in any case, vastly scaled back in ambition compared to prior pledges of robo-taxis everywhere.