There’s been much chatter lately about the astronomical $1.75 trillion (€1.5 trillion) valuation underpinning SpaceX’s expected IPO, but let’s not forget about Elon Musk’s other outrageously valued trillion-dollar company – Tesla.
Shares in the electric vehicle maker, which reports earnings on April 22nd, have tumbled even as the broader market rallied, and have now lost almost a quarter of their value in 2026.
That repricing hasn’t assuaged the valuation concerns of JPMorgan’s Ryan Brinkman. He reckons the stock remains in fantasy land, saying shares could fall 60 per cent before hitting fair value.
Bulls might say the JPMorgan man has been too bearish for too long, but the numbers are sobering. Brinkman notes that, in June 2022, analysts expected Tesla deliveries to hit 1.366 million by the first quarter of 2026. Instead, they delivered 358,023 vehicles – a shortfall of more than one million cars.
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And in 2022, analysts also expected free cash flow of $35.7 billion in 2026. Now, they expect the company to burn about $5 billion in cash this year, or a swing of about $40.7 billion, highlighting just how dramatically expectations have deteriorated.
But who cares? Not Tesla investors – the stock is up about 50 per cent since then, notes Brinkman.
He is not alone in his scepticism. HSBC’s Michael Tyndall also has a “reduce” rating on Tesla, a polite way of saying he thinks the stock could lose two-thirds of its value.
Now, saying a stock is dramatically overvalued is different from saying it will fall. Tesla bulls have always valued hype rather than hard numbers, and many seem content to bet on a fantastical future of self-driving cars and robotics while the present business limps along.
Consequently, Tesla’s upcoming earnings probably won’t move the dial. Instead, expect the usual pattern, whereby the inevitably poor numbers alarm valuation-minded investors and get ignored by those who buy the story rather than the balance sheet.
