By Paul Whiston, March 10, 2025
The spectacular rise and fall of Tesla’s stock is not merely a reflection of market volatility; it is emblematic of investors, blinded by the cult of Elon Musk, who convinced themselves that his proximity to power—his alliance with Donald Trump—would secure Tesla’s dominance. It was a delusion, one that has now unravelled under the weight of reality.
Tesla’s stock, once buoyed by speculative euphoria, has nearly erased its post-election gains. The cracks in its foundation have been laid bare: sales are declining for the first time in a decade, its stranglehold on European and Chinese markets is slipping, and Musk, rather than leading his company, has become a political sideshow. The promise of limitless expansion, of perpetual growth, has collided with the hard truths of a business that, at its core, still depends on selling cars in a market that is no longer bending to its will.
The broader market downturn has only exacerbated Tesla’s struggles. The speculative frenzy that once fueled record highs has been snuffed out by fears of economic instability, the consequences of America’s unravelling trade policies, and the sobering realization that growth cannot be willed into existence.
Analysts, once willing to justify Tesla’s astronomical valuation, are now slashing price targets. Bank of America has warned of looming risks: slowing car sales, the absence of an affordable EV model, and doubts about the viability of Tesla’s much-hyped robotaxi program.
Yet even now, there remains a desperate hope that Tesla can recover—that a short-term bounce, triggered by a slight uptick in sales or a PR-friendly announcement, might restore faith. But faith cannot paper over reality. Tesla remains grotesquely overvalued, trading at nearly 90 times forward earnings in a market where the standard is a fraction of that. The bubble has not just burst; it has exposed the rot beneath.
