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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The post-election Trump bump has come and gone. Along the way, no US stock was more powerfully buffeted than Tesla. Elon Musk’s carmaker had, at one point in December, gained $733bn in market capitalisation since the US election, more than any other company in the S&P 500. Its 54 per cent drop since then is also the greatest fall among index members. Musk is the reason, in both directions.
Even before Donald Trump won the presidential vote and hired the world’s richest man as his efficiency tsar, Tesla — then worth about $800bn — was valued more like a moonshot than a carmaker. The company was trading at around 80 times expected earnings for 2025, putting it in the top 3 per cent of US-listed companies worth more than $1bn, according to Capital IQ data. The median price-to-earnings multiple at the time was 15 times.
Not even the most far-fetched automotive estimates justified that. Before the election, Lex calculated that Tesla’s car business was worth around $240bn, based on a generous estimate of 6mn vehicles by 2030. The remaining $560bn or so looked like a heady cocktail of hope about future projects, from self-driving taxis to humanoid robots.
Notwithstanding Trump’s pledge to buy a brand new Tesla, some things look worse for the carmaker now than in November. Sales have plunged in Europe; Tesla has faced protests and vandalism. Production in China, a huge market, has slumped. And while Musk claims the death of EV credits in the US benefits Tesla by harming his competitors, that remains an untested theory.
But remember: Tesla isn’t valued like a car company, which means the fall in its valuation — including a vicious 15 per cent drop on Monday — is only vaguely about automotives. Instead, the company’s massive gain since the election and subsequent fall reflects investors’ shifting views on the plausibility of his various moonshots.
On that front, Musk’s value to Tesla has probably gone from overvalued to oversold. After all, the likelihood of Tesla eventually reshaping the world of autonomous mobility probably hasn’t shifted much. True, Musk has less time for Tesla these days, but his plate was piled high with other ventures long before he pitched up at the White House.
As for humanoid robots, those too remain as likely — or not — as ever. Musk has said the descendants of his prototype droid Optimus could be “the biggest product ever of any kind”. Hubris perhaps, but the future is undeniably going to be robotic. Bank of America analysts just doubled their estimate of global humanoid shipments, to 10mn by 2035.
The trouble is, the more the Tesla chief promises, the less plausible he sounds — especially as tech valuations slide. For example, Musk told analysts as recently as January that his carmaker could be worth more than Apple, Microsoft, Nvidia, Amazon and Alphabet combined, currently equivalent to $13tn. As of Monday, it was just 5 per cent of the way there. Hype took Tesla briefly to $1.5tn; only credibility will get it back there.
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