Who cares about falling sales, missed targets and a business model even valuation experts struggle to define?
Not Tesla shareholders, with shares hitting their first all-time high of 2025, driving its market capitalisation above $1.6 trillion.
It came just a few weeks after the latest round of weak car sales – EU sales slumped 48 per cent in October – and less than a week after long-term Tesla bull Morgan Stanley downgraded the stock due to its “full valuation”.
That’s one way of putting it. Tesla trades on about 210 times estimated earnings.
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EV sales, hurt by Elon Musk’s polarising political rhetoric, won’t revive any time soon.
Deepwater’s Gene Munster predicts Tesla will probably miss delivery expectations in 2026, with actual growth far below estimates. However, that “doesn’t change the Tesla investment case, which is built on FSD [full self-driving], Robotaxi and Optimus”.
That is, car sales barely register – what matters is Musk’s vision of robotics and a driverless future.
Hence, the buoyant reaction to Tesla testing driverless taxis in Austin without safety operators. Wedbush’s perennially bullish Dan Ives says 2026 will be a “monster” year for Tesla, with a potential $3 trillion market capitalisation if autonomy and robotics succeed, despite these being unproven revenue streams.
Another analyst, William Blair’s Jed Dorsheimer, estimates the motor business accounts for just $30-$40 of Tesla’s $475 share price.
The uncertainty is reflected in Morgan Stanley’s wildly varying bull case for Tesla shares ($860) and bear case ($145).
Little wonder valuation expert and former Tesla shareholder Prof Aswath Damodaran is flummoxed. “I’m not even sure what Tesla is as a company any more,” he said recently.
“I can’t tell you what the story is because I’m not sure Tesla knows what the story is going forward.”
In short, Tesla’s price is a bet on a future that may not exist, and a reminder that even the experts can’t agree on what they’re buying.
