Tesla’s stock defied gravity for years. Is Elon Musk’s EV party over?

Chris Kirkham

Mon, Mar 10, 2025, 3:02 AM 9 min read

By Chris Kirkham

(Reuters) - Tesla’s banal has dropped by astir fractional successful 3 months. Even so, investors are inactive debating whether Elon Musk's electric-vehicle shaper remains overpriced.

The company's marketplace capitalization has dropped 45% since hitting an all-time precocious of $1.5 trillion connected December 17, erasing astir of the gains the banal made aft CEO Musk helped concern the predetermination triumph of U.S. President Donald Trump.

And yet Tesla continues to fetch a valuation acold supra those of the world’s biggest automotive and exertion firms, judging by modular fiscal metrics. That’s due to the fact that astir investors and analysts person bought Musk’s transportation that the world’s most-valuable automaker isn’t truly a car institution astatine all, but alternatively an artificial-intelligence pioneer that volition soon unleash a gyration successful robotaxis and humanoid robots.

Tesla’s electric-vehicle concern accounts for astir each of its gross but little than a 4th of its stock-market value, according to a Reuters reappraisal of much than a twelve analyses by banks and concern firms. The bulk of its worthy rests connected hopes for autonomous vehicles Tesla hasn't yet delivered, contempt Musk's promises successful each twelvemonth since 2016 that driverless Teslas would get nary aboriginal than the pursuing year.

The stock’s diminution since December stems from falling conveyance income and profits; protests of Musk’s governmental activity, including his wide firings of U.S. authorities workers arsenic a elder Trump advisor; and capitalist worries that authorities are distracting the world’s richest antheral from tending to his currency cow. Still, Tesla’s marketplace capitalization remains up astir $65 cardinal since the predetermination – an magnitude higher than the full worth of General Motors.

Tesla’s full worthy of $845 cardinal inactive tops the adjacent 9 most-valuable large automakers combined, which collectively sold astir 44 cardinal cars past year, compared to Tesla’s 1.8 million.

Investors person agelong stake connected Musk’s visions of Tesla’s time alternatively than its profits today. But the widening spread betwixt its real-world show and analysts’ net estimates for unborn products has prompted immoderate to pass of irrational exuberance.

“For however overmuch longer tin the banal stay divorced from the fundamentals?” JP Morgan expert Ryan Brinkman wrote successful January, aft Tesla reported mediocre net and its first-ever yearly vehicle-sales decline.

Tesla and Musk did not respond to requests for comment. In July, Musk said investors who don’t judge Tesla would “solve conveyance autonomy” should “sell their Tesla stock.”