Tesla stock price means nothing
I keep reading about how Tesla is in trouble. Well, yes, in the sense that its business model is a fail. But Tesla stock price has been defying gravity. Why? Probably because Musk, who is richer than God, can keep Tesla’s stock price afloat. How? Well as the commissar of DOGE, he’s managed to get federal grants to subsidize his businesses, SpaceX and Tesla. He can keep buying Tesla stock and maintain the illusion that, like Dogecoin, it has value.
The usual metrics don’t apply here. At least for now. Is it sustainable? Probably not in the long term, but at least until Trump is out of office, Musk can afford to avoid the consequences of his bad decisions.
The usual metrics don’t apply here. At least for now. Is it sustainable? Probably not in the long term, but at least until Trump is out of office, Musk can afford to avoid the consequences of his bad decisions.
That has to be one of the most spectacularly ill-informed posts I’ve heard about Elon Musk and Tesla. Do you just write things without knowing anything about them? All of elon’s liquid wealth is tied up in Tesla stock which he uses as collateral for massive loans from banks like Morgan Stanley and others on Wall Street. After mindlessly supporting every musk endeavor, Wall Street has finally figured out that Tesla is a pig, the numbers are in freefall, and institutions are dumping stock. All Americans who care about democracy should cheer this wonderful event.
@Bohrer,
LOL!
Tesla stock is at or above its average price for the past five years. It’s more than twice what it was on 2 January 2023. This appears to be a new and unfamiliar use of the word “freefall.”
I’ll certainly be cheering if and when Tesla stock actually does collapse.
Please point out the errors in the post. Take all the time you need.
Good Morning Joseph
Maybe things have changed a bit. A quick scan revealed. I went to that great financial news site called Yahoo/Benzinga. Can’t vouch for its credibility. Not a lot of detail and a lot of generalizations. One comment in this piece-light was:
~ ~ ~ ~ ~
– “Over the next few years, Musk’s companies will continue to hold 52 active federal contracts totaling an additional $11.8 billion, with the majority of the financing coming from the DoD and NASA.”
– According to The Post, nearly two-thirds of the funds Musk’s businesses received came in just the last five years. In 2024 alone, $6.3 billion in federal and state funds were committed to his venture . . .
I still see a lot of Teslas around here in the Southwest. I do not expect they will disappear anytime soon. Gotta be a big replacement battery market coming along soon also.
The “pig” lost 10.4% in the market. My funds dropped about the same over the last 30 days. He does have a flow of income coming in from the Gov, as long as Trump continues to like him. Did you watch the first stage(?) of the rocket launch get grabbed in midair before it hit the ground? Pretty kool, heh? In new and ongoing contracts, Musk has liquidity in government funding coming in as long as the Gov or Trump do not can Tesla and him. The “pig” will keep paying for years to come. Again, unless Trump cans him.
I would not mind seeing him get caught up in funding issues. He shows much disrespect for others who are far beneath him.
Thank you for your comments.
You wrote,
But Tesla stock price has been defying gravity. Why? Probably because Musk, who is richer than God, can keep Tesla’s stock price afloat. How? Well as the commissar of DOGE, he’s managed to get federal grants to subsidize his businesses, SpaceX and Tesla. He can keep buying Tesla stock and maintain the illusion that, like Dogecoin, it has value.
1. Tesla has not received any additional subsidies or federal grants from the Trump administration. Musk has been able to kneecap most of the regulatory investigations into Tesla but the tariffs on imported parts will significantly hurt their business. Trump administration officials have discussed ending the purchase subsidies on EVs which would decimate Tesla.
2. Musk cannot buy shares of Tesla in quantities which would support the stock price and has not been buying shares of Tesla for years. As an owner of a greater than a 5% stake in the company, musks holdings have to be publicly disclosed. He has not been buying. In fact, his most recent transaction was selling in 2022 I believe. And he wouldn’t be able to buy in any kind of size, because He has already borrowed against a big chunk of his holdings. The banks will demand more collateral from him for his existing loans given the 50% decline in the stock over the last couple months.
The implication of your post is that the only reason Tesla stock trades where it does is because of Musk buying to keep it afloat. This is false. Even now, you can find both institutional and retail investors who are delusional enough to believe that Tesla will be dominant in self-driving vehicles. Tesla was added to the s&p 500 several years ago so every time anyone adds money to an index fund, that cash was plowed into Tesla.
The gist of your view seems to be that nothing important is happening, and nothing important will happen vis a vis Tesla and Musk because the stock price is entirely within his control at least until the end of Trump’s term. We will see what happens the next 3 and 1/2 years, but Musk does not control the price of Tesla and the company is in deep shit, the worst since it’s founding.
To me, when a once trillion dollar stock falls 50% in 2 months, that qualifies as being in freefall. However, if you wish to define it differently, fine. Semantics.
@Bohrer,
“This is false.”
And you know this . . . how? Ever heard of straw buyers?
“To me, when a once trillion dollar stock falls 50% in 2 months, that qualifies as being in freefall.” It’s had a greater fall in the past. So if that’s what you mean by freefall, then I have to ask “so what?”
“Tesla was added to the s&p 500 several years ago so every time anyone adds money to an index fund, that cash was plowed into Tesla.” Wait, so Tesla is both being sustained by index funds *and* in freefall?
“We will see what happens the next 3 and 1/2 years” Indeed. Predictions are hard, especially about the future.
@Joseph,
When you posted that Tesla was in “freefall,” it was selling for $240/share. Today, it’s selling for $360/share. This appears to be a new and unfamiliar use of the word “freefall.”
Heh.
Joel:
Nice update. Joel, maybe Musk bought a bunch to make it look better?
@Bill,
Or found a proxy buyer. Tesla sales are way down in Europe. But stock prices aren’t necessarily tied to profits. A lot of stock prices are gambling these days.
Just read where when Trump declares a tariff, the stock prices drop. People rush in and buy them up. Then Trump decreases or eliminates(?) the tariff. Prices go back up and the buyers sell. They make a few bucks with Trump playing games with Tariffs.
@Bill,
That’s what I meant in my “Art of the fake deal” post when I wrote: “Savvy traders are buying on the TACO tariff dips and selling on the TACO caves.”
Joel:
Sometimes I miss it. So as a good prof must do at times, tell the student what he means. Or I just forgot what you wrote previously. The title certainly says what it means.