Why I Wouldn’t Buy Tesla Stock
Tesla’s robotaxi and humanoid bot ambitions might excite headlines, but investors are still paying venture-capital prices for a public company.
Its valuation is effectively a call option on a highly uncertain future – where demand for these emerging technologies, Tesla’s ability to execute on them, and the economics of production all remain unproven – as well as highly regulated and capital-hungry.
In the short run, the financialization of the stock also propels its volatility: options turnover commonly averages hundreds of billions a day, often exceeding the rest of the S&P 500 combined and pulling passive funds along with it.
Musk’s relative level of involvement in politics is largely a sideshow to the reality that Tesla’s stock already embeds around $1 trillion in narrative-driven valuation untethered from current fundamentals.
Bottom line: buying Tesla here means betting its moonshots scale relatively fast enough to justify an exuberant valuation – with the embedded pricing implying large upside if they land (and, importantly, if such demand/profits flow to Tesla), but very little margin of safety if they don’t.