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- Tesla Is a Protest Success Story
Tesla is a meme stock. Its price/earnings ratio is around 120. Ford, Stellantis and GM’s P/Es are in the 6-7 range. That means it is not being valued as what it is, a car company with a large US presence, but rather based on what the apes pressing the buy and sell button think it could be. It’s clear to anyone paying attention that Tesla’s technology is nothing over and above the other automakers, and the ancillary nonsense like AI and robotaxis and whatever ketamine-fueled bullshit that springs out of Elon’s smooth brain is just a way to juice the stock for the apes.
So when it started its freefall, losing over 1/3 of its value in just a few days, it’s easy to think that Trump might have “rescued” it by telling the MAGA faithful to buy a Tesla. The chart shows a tremendous recovery, just on the word of Trump:
It is gross, terrible and ugly that Trump is helping Musk manipulate his stock, but here’s the real tale of the tape:
Tesla took a big bounce when Trump was elected and it was clear that Musk would play a big part in the Trump administration. Tesla hit $400/share during that bubble. Now it’s gone — Tesla’s stock is more-or-less back to where it was pre-election. Unless Trump’s purchase of a Tesla inspires MAGAs to go out and buy one, too, their Q1 earnings report is going to be awful. The bounce from Trump pimping Elon’s rides will be a dead cat bounce, and that’s deadly to Musk:
Musk owns significant interests in several different companies, including Tesla, SpaceX, The Boring Company, X (formerly Twitter), Neuralink, and xAI.
Two of them, Tesla and SpaceX, account for the vast bulk of Musk’s reported $400 billion net worth.
But except for Tesla, all of these companies are privately held. And none of them generates any profit. [Post-publication note, Feb. 20, 2025: SpaceX financial statements are not public. Some have suggested that the Starlink business segment may be profitable. So, it may be inaccurate to say that Starlink as a segment, or SpaceX as a whole, are not profitable. We just don’t know.]
SpaceX accounts for the second largest chunk of Musk’s net worth (reportedly some $147 billion). But even SpaceX, with its Starlink service and its contracts for satellite launches, loses money, and is forced to constantly engage in new capital raises. (The $147 billion figure is based on the amount new investors are willing to contribute because they believe in Musk, not because they understand SpaceX.)
Importantly, Musk’s wealth associated with all these private companies, including SpaceX, is illiquid. Losing money as they do, these companies are difficult to value. Further, their shares are not traded on public markets, and consequently Musk cannot easily convert his equity into cash.1
Bottom line: most of Elon Musk’s net worth, and all of it that is liquid, derives from Tesla.
The quote above is a distillation of the work of Ed Niedermeyer, a journalist who wrote the book Ludicrous about Tesla’s early years. Niedermeyer is active on BlueSky.
Musk’s Twitter acquisition is secured by $62.5 billion of his Tesla stock. I assume that was priced at the time of the sale, and around the time of the close of that sale, Tesla was trading in the $200-250 range. So, Tesla at anywhere under $200 is a big problem for Musk, just for this one collateralized loan. Since he’s mostly illiquid, he’s probably got other loans against Tesla stock at various prices (probably all around $200 since the stock has been in that vicinity since 2021). So this can explain the panic move to have Trump buy a Tesla — TSLA at $150 or $100 or $75, which are still high prices, but a lot closer to what the company is really worth, is deadly to Musk’s leveraged financial picture. Like Trump, he’s really not that rich.
Analysts are constantly lowering their sales estimates for Tesla. The brand has been poisoned in no small part due to Tesla Takedown protests. This is the way.
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