Tesla has always been an anomaly, but things just keep getting weirder. And this time, it’s not because its investors seem A-okay with the company being managed by an egotistical, drug-addicted fascist who appears hellbent on manipulating the world to his horrifically twisted view of the future. Instead, the weirdness comes from Tesla performing amazingly and terribly at the same time. This is an untenable situation that strongly implies something fundamentally wrong is happening. Let me explain.
Recently, Tesla’s stock has started soaring! From its dire position earlier this year, where it seemed it would plummet so rapidly that Tesla could collapse in the near future, it has now risen by 14% compared to this time last year. Thanks to Musk buying an extra $1 billion of Tesla stock, this increase has sent his personal wealth to over $500 billion, making him the first person to ever reach that milestone.
So, why this rapid turnaround? Why is Tesla stock suddenly doing so well?
The media has pointed towards two reasons.
Firstly, focus. One of the major Tesla investor concerns was that Musk’s time was being consumed by DOGE, which not only damaged his and Tesla’s brand but also meant his hands were off the wheel at Tesla. This, along with the sales fall-off, was what caused Tesla’s stock price to plummet earlier this year. But Musk has now left DOGE and plans to fully refocus his attention on Tesla. Musk is also potentially receiving a $1 trillion pay packet to ensure his focus remains on Tesla (read more about how stupid that is here). So, the general gist is that Tesla investors are happy Musk is back and motivated and are therefore willing to pile more money in.
Secondly, Musk has bought $1 billion in Tesla stock. Now, Musk has sold off a huge portion of his stake in Tesla over the years, so this sudden purchase marks a stark change in Musk’s approach. To many investors, this signalled that he is confident in Tesla’s decision to shift to a future that focuses on AI and robotics. So, they too felt confident and slid even more money across the table.
I’m sorry, but these “reasons” feel very surface-level to me.
For one, they indirectly confirm that Tesla investment is a cult. They are openly investing in the concept of Elon Musk, not the reality of Tesla. That in and of itself is concerning, especially when you factor in his noticeable mental decline and worsening extremism over the past few years.
Let’s also not forget that Musk knew his return to Tesla, and this stupidly large pay packet, would increase the company’s value, as that is what die-hard Tesla investors were lobbying for. He also knows that Tesla investment is a cult for him, and he has used that to manipulate the market in his favour multiple times. His “taking Tesla private” shenanigans in 2018 were just the tip of the iceberg. So, he understands that buying $1 billion worth of stock in a show of confidence will also boost the value.
Logically, all of this can be attributed to Musk’s market manipulation, which he has practised for years, rather than any tangible improvements at Tesla.
There is also the wider concern about the US stock market. The overall market revenue has failed to significantly increase, unlike the overall market value. As such, indices like the S&P 500 now have an average P/E ratio of 30, suggesting the market is overvalued and lives in a bubble. This is almost entirely the result of the AI bubble, but if you want to find out why, and just how dangerous it is, read my previous article here. Still, let’s not lose sight of the fact that Tesla is now considered an AI company, and as such, it too is trapped in this bubble, which will also drive its price up.
In other words, Tesla’s miraculous stock price increase has nothing to do with what is actually happening at Tesla and everything to do with Musk’s manipulations and the overall market.
This is pretty worrying, because Tesla, as a business, is f*****g ropey!
Not only are sales in the gutter, but the one product that was supposed to resolve the problem, the Cybertruck, is the largest flop in automotive history. Naturally, its profit is almost non-existent. In fact, the only thing keeping Tesla profitable is selling carbon offset credits, and that market is predicted to drastically shrink. The Robotaxi rollout isn’t the sudden boom Musk promised — instead, it is an embarrassing display of just how flawed Tesla’s technology is. FSD is so flawed and dangerous that it seems Tesla is struggling to get licences to expand its operations. The Robotaxi rollout has been so abysmally unsuccessful that investors are launching a class action lawsuit against Musk for allegedly misleading investors about Tesla’s self-driving capabilities. Meanwhile, Tesla’s Optimus robot, which, according to Musk, will soon make up “80% of Tesla’s revenue”, is failing to develop at all and is still a country mile behind its competition. Even the engineer who spearheaded the Optimus program has called it functionally useless and nothing more than a PR stunt.
In short, Tesla’s core business is falling apart, and the products it hopes to shift aren’t just awful but come from a long line of noticeably stagnant development.
Does that sound like a business you should put your money behind?
Somehow, it still gets worse because all the talent that actually makes Tesla, and all of Musk’s other companies, tick are leaving en masse.
A large number of major executives, project leaders and high-up engineers who hold critical roles in Tesla, X, xAI and SpaceX have left in a veritable tsunami. The Financial Times has interviewed many of these figures, and almost all said that the reason was due to psychological burnout, frustration at Musk, strategic disagreements and political disagreements with Musk.
Why is this a huge problem? Well, despite Musk’s desperate attempts to convince the world that he is a supergenius and that everything Tesla or SpaceX produces comes directly from him, that simply isn’t the case. For companies like these to even function, they need a bucketload of world-class talent.
In the early days, Musk accepted that fact and allowed the talent to do their thing. But from about 2016 onwards, Musk drank his own Kool-Aid, and since then, he has micromanaged and overruled his engineers at every turn.
We know his engineers warned him that making FSD a vision-only system would make it incredibly dangerous, but he ignored them and pushed ahead anyway. We know executives warned him that Robotaxis were a dead end and that he should focus on making more affordable EVs, but he pushed them aside. We know head engineers told him that Optimus would never be a functional product, yet he pushed them out and plans to bet the entire company’s future on them. We know experts warned Musk that the dry-coated 4680 battery was an obvious mistake, as the technology was unproven, difficult, and no more efficient than already proven technology, but again, he ignored them, and now the battery is trailing behind its competition. We know that Musk has grown increasingly toxic and surrounded himself with yes-men. It is all but confirmed that this is why the Cybertruck is so shoddy, because Musk was the one making all the critical decisions, which totally compromised it.
Notice something here? Everything that is dragging Tesla down can be traced back to Musk ignoring the experts he hired and going forward with his misinformed and ill-informed ideas, pig-headedly thinking he knows best.
This talent is what has kept Tesla operational. They have ensured the scales of productivity remained on an even keel by countering Musk’s horrific management. But now they have all given up and gone home, leaving Musk free to take full control. He will hire yes-men sycophants to fill the vacuum, allowing his mental state and Tesla to continue their rapid downward spiral.
In summary, Tesla, as a company, is losing the original talent that made it great, with more control being handed to the arguably mentally unwell CEO, who has a long track record of woefully poor management. Its core business is crumbling away, with no apparent attempts to revive it. And, on top of all that, the products the company is pivoting towards are so bad that investors and even their own designers are calling them shite.
So, why are investors willing to put money behind this? It makes no sense. This is why you shouldn’t care about Tesla stock. It hasn’t reflected the reality of Tesla for years now. The only time the stock price is even remotely relevant is when reality starts to hit home, and that has only happened when it falls.
This is even more evidence of how bad the AI bubble is getting and how Tesla investors — particularly institutional bulls — live in a delusional cult, which isn’t a figure of speech. This is why Tesla is becoming increasingly unhinged. Reality doesn’t matter at all anymore, only dedication to the dear leader and his moronic rhetoric.
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Sources: Sky, WION, FT, News 24, Inside EVs, Will Lockett, Will Lockett
I remember from the dotcom days, a Doonesbury cartoon about the archetypal dotcom company "its only product is its own stock, and everyone is paid in options"
A couple of questions for those more financially adroit than I am:
In ranking Musk's wealth, does it matter that much of it is unrealized gains (Tesla stock) as opposed to actual money in the bank? And if the Tesla bubble finally pops, what happens to his status as "the world's richest man"?