Elon Musk tried to pump Tesla’s stock (TSLA) by claiming a 10x increase in profits, but it failed. In fact, the stock is down 10% since Musk’s pump.
After an analyst posted a prediction that Tesla would increase its profits by 256%, Tesla CEO Elon Musk responded
It will require outstanding execution, but I think more like 1000% gain for Tesla in 5 years is possible.
The comment was quickly propagated by Elon fans and the community of “Tesla all-ins” as being a sign that Musk, who is quite busy with X and DOGE lately, still believes in Tesla.
And yet, Tesla’s stock is down 10% since Musk’s pump:
There are a few factors at play here. Mostly, it’s just not a great pump and shows Musk is disconnectedness with Tesla and its shareholders.
Many of his fans took it as a “1000% or 10x increase in Tesla’s stock”, but the analyst Musk was responding to was talking about profits.
At the time of the tweet, Tesla was trading at 150x profits. With a P/E of 15, Tesla’s stock price already assumed a roughly 10x increase in profits over the next few years.
Therefore, Musk saying that with “outstanding execution,” he “thinks” Tesla could “possibly” achieve a “more like” 10x increase in profits in “5 years,” is just not the pump that his fans thought it was. In fact, it was basically him saying that Tesla is currently priced for perfect execution.
Despite the drop in the last two days, Tesla is still trading at a price-to-earnings ratio of ~130.
Electrek’s Take
I think this shows how disconnected Elon is from Tesla and its shareholders. They thought, and he probably did too, that this would be a great pump, but it’s simply not.
Especially not amid protests and boycotts against Tesla while the company already had demand issues.
They are clinging to the idea that the Model Y refresh will save the company and return it to growth, but I don’t see that happening right now.
I think that Elon distancing himself from Tesla would be the only thing that would help right now, and it doesn’t look like it will happen. So, the shareholders will have to push him out, which won’t happen until the stock price motivates them.
We are still quite a bit away from that, but I think it’s headed in that direction fast.
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