Tesla Can, And Will, Fall Further.
This is just the beginning.
I know it feels like a lifetime ago, but cast your mind back two months, a week before the Orange Man was given his paper throne. At the time, Tesla felt unstoppable. Its stock was sky-high, and its CEO had secured himself political power over any governmental body that couldn’t hold him accountable. So, imagine the shock when JP Morgan predicted that Tesla shares would lose 66% of their value by the end of the year! Fast forward to March 2025, and Tesla’s value has already plummeted over 50% from its peak in December 2024, ultimately proving JP Morgan correct. And others believe it could fall much further. Christer Gardell, a Swedish billionaire and hedge fund manager, recently stated in an interview that “Tesla, especially now with the whole Musk circus going on everywhere, is probably the most expensive stock on the global stock exchanges right now. It could go down 95% — and maybe it should go down 95%.” That feels impossible, right? Tesla is a monolith of the EV world; it can’t crumble away like that. Well, if you look at the figures and reality of Tesla, you will quickly realise that Gardell is being incredibly optimistic.
Okay, so why is Tesla losing so much value?
Well, firstly, the company has been massively overvalued for years now. Its P/E ratio (the ratio of a company’s value to its net income) is ten times higher than the average for the auto industry. This is in spite of the fact that Tesla hasn’t held the lead in EV or autonomous driving technology for years. In other words, this is a bubble ripe to pop.
So what popped it?
Well, Musk did. EV customers are overwhelmingly progressive, so Musk’s public Nazi-adjacent pro-authoritarian and technocratic libertarian nonsense has caused a global backlash, crashing sales. Sales in Europe are down 45%, sales in China are down 49%, and sales in Australia are down 72%! What’s more, areas like the UK are seeing a 70% increase in the number of used Teslas for sale, crashing prices to the floor.
But here’s the thing: for a stock to be so overvalued as Tesla was, someone has to keep pumping it up. We saw this with Theranos and Enron. This is why Musk has been publicly launching obvious vapourware every six months or so, or constantly posting outrageous claims about what his tech can do. For Tesla to stay so valuable, he has to keep boosting that narrative. But, with Musk so involved with DOGE and his image now in absolute tatters, he has stopped doing this publicly, leaving the stock incredibly vulnerable.
Naturally, people are now looking at Tesla’s idiotic tech and false promises and reassessing them. People are starting to understand and believe the robotics experts who called the Tesla bot garbage. People are starting to read reports on just how dangerous and unfit FSD is. People are now eyeing up the new EVs from Hyundai, BYD, VW, and BMW and realising they are better than Tesla’s aged lineup. Without the distraction of Musk at the helm, the world is beginning to look at Tesla objectively and is collectively realising that it is an utter mess of deception and flawed innovation.
It’s not really surprising that anyone with Tesla stock is offloading it as fast as possible.
But how can it fall even further from here?
Well, I made a similar prediction to Gardell about a week ago (read more here). I tried to value Tesla as it stands today. I assumed generously that Tesla’s falling sales would reduce its net income by 45%. I then generously valued it in line with a P/E ratio of Toyota, and the result was a valuation of $55.44 billion, or 94% of what it was trading for when I wrote the article.
This is why Gardell’s prediction isn’t ridiculous. Even with optimistic assumptions, such as Tesla’s income only falling by 45%, despite sales slumping far more, and Tesla overheads being rigid, and using the same P/E ratio as Toyota, one of the largest and most highly valued car companies on the planet, with a far, far better brand image, it still loses the vast majority of its value.
If anything, Gardell’s prediction is bullish when looking at the context, particularly if you look at Tesla’s balance sheet.
Tesla has $48.39 billion in debt, and Musk has at least $23.89 billion in personal debt tied up in Tesla, making Tesla’s total liabilities $72.28 billion (read more here).
In other words, even if we give Tesla an optimistically real value, its liabilities are significantly larger than its overall value.
What does that mean? It means that Tesla is currently functionally worthless.
So, can Tesla lose up to 95% of its value? Well, if the market actually valued Tesla realistically, which they are being forced to do as a result of his moronic antics, it could lose 100% of its value. Will this come to pass? I don’t know. People like Musk and Trump have pushed the world into a crazy place untethered from reality. But I do know one thing: Tesla can and will fall further than it already has.
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Sources: Reuters, CNBC, The Telegraph, Sky News, The Guardian, Car Scoops, BM, Clean Technica, Teslarati, Al Jazeera, Will Lockett, Will Lockett, Will Lockett