Elon Musk recently made headlines when he claimed that Tesla could see a 10x increase in profits over the next five years. Many saw this as a sign that Musk was still fully invested in Tesla, even though he’s been increasingly focused on ventures like X (formerly Twitter) and Dogecoin lately. However, despite the hype around his bold statement, Tesla’s stock has dropped 10% since then. So, what went wrong?
The Big Statement
It all started when an analyst predicted that Tesla’s profits could rise by 256%. In response, Musk raised the stakes, saying he believed that with “outstanding execution,” a 1000% gain in profits was possible for Tesla over the next five years.
Naturally, this comment quickly gained traction among Musk’s diehard supporters and the “Tesla all-in” community, who viewed it as proof that Musk still had unwavering confidence in Tesla’s future. The idea was that if anyone could deliver a massive surge in profits, it was Musk—right?
But, as we’ve seen, the stock didn’t react the way people expected. Instead of going up, it’s actually down 10% since Musk’s optimistic tweet. So, what went wrong?
The Disconnect Between Musk and Tesla’s Stock Price
To understand the decline, we need to dig a bit deeper. Musk’s statement was likely misinterpreted by many. While fans thought he was promising a 10x increase in Tesla’s stock price, Musk was actually talking about profits. There’s a big difference here.
At the time of his tweet, Tesla was already trading at a 150x price-to-earnings ratio (P/E). In simpler terms, this means that investors were already pricing in the expectation of Tesla’s profits growing dramatically in the future—roughly 10 times the current level. In fact, the stock price already reflected a P/E of around 15, which assumes Tesla will achieve significant growth.
So, Musk’s comment that Tesla could see a 10x profit increase in five years wasn’t exactly the “pump” that many hoped for. In fact, it was basically an acknowledgment that the stock is already priced for perfection, meaning that any failure to meet those lofty expectations would lead to a decline.
Despite the recent dip, Tesla is still trading at an incredibly high P/E ratio of around 130, meaning the stock remains heavily inflated relative to its current earnings. This sets the stage for potential disappointment if Tesla doesn’t deliver on those ambitious projections.
The Reality Behind the Hype
Many critics, including Tesla fans, have pointed out that Musk’s statement shows how disconnected he’s becoming from Tesla’s day-to-day operations and its shareholders. They believed (and perhaps Musk did too) that his comment would send the stock soaring, but it’s turned out to be more of a dud.
One particularly biting comment from a user named Andreas Thaler sarcastically pointed out that international customers were “loving” Tesla so much that the company would soon be selling millions more cars, boosting profits. In reality, however, Tesla has been facing multiple challenges—protests, boycotts, and ongoing demand issues that are hurting the company’s image and financial performance.
Some investors are still pinning their hopes on the Model Y refresh as a way to return the company to growth, but many are skeptical that this will be enough to turn things around.
Is It Time for Change at the Top?
As the stock continues to struggle, some are wondering if Elon Musk should step away from Tesla entirely. While this may seem like a drastic suggestion, it’s one that’s gaining traction among certain investors. They believe that the company’s performance might improve if Musk distances himself from it and focuses on his other projects.
However, this is unlikely to happen unless the stock price continues to fall, motivating shareholders to push for leadership changes. While that may still be a long way off, it’s a growing possibility if Tesla’s struggles persist.
Final Thoughts
Musk’s recent claim of a 1000% profit increase for Tesla over the next five years might have sounded bold and exciting, but the reality is that it didn’t move the needle as much as expected. Instead, it highlighted the gap between Tesla’s current valuation and the challenges the company is facing.
Until Tesla can demonstrate sustained growth, investor confidence may continue to wane, and that could spell more trouble for the stock price in the future. For now, it seems that Tesla fans—and shareholders—are left waiting for the next big thing that will turn the company’s fortunes around.