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Good morning, investors. Tesla is worth 1.6x the next 15 automakers combined.
That's an incredible valuation, but it also means investors expect incredible results.
Is Tesla still worth investing in? ↓
Tesla Vs. World
"Turns out the future does have flying cars." — Elon Musk
That's what Musk said when teasing the next Tesla Roadster.
But selling a vision is something Elon has always been good at.
The numbers, however, point in a different direction.
Compared with 15 other major automakers combined, Tesla has:
160% of their combined market value
Just 5.45% of their revenue
Just 6.10% of their net profit
In other words, investors are paying a huge premium for Tesla's future.
And that's only the beginning. What comes next will shock you.
Over roughly five years, Tesla stock gained 24.9%, compared with 72.6% for the S&P 500 ETF (SPY).
That's nearly 48 percentage points of underperformance.
And the financial results help explain why:
Operating profit fell 51% since 2023 to $4.4B in 2025.
Operating margin dropped from 16.8% to 4.6% between 2022 and 2025.
Free cash flow is forecast at -$10.2B in 2026, down from +$6.2B in 2025.
Q2 2026 operating profit fell 57% year over year to $398M.
Revenue fell 2.9% in 2025 to $94.8B.
Vehicle deliveries dropped 9.5% since 2023 to 1.64M.
Capital spending is expected to jump 207% in 2026 to $26.2B.
Net profit margin fell from 15.5% to 4.1% between 2023 and 2025.
Vehicle production dropped 10.4% since 2023 to 1.65M.
Forward P/E at 185.6x, up from 52.4x in October 2022.
Tesla's car business is getting weaker, yet investors are paying more for every dollar of expected earnings.
Of course, the bull case isn't just about cars anymore.
It's about robotaxis, robotics, AI and energy. If those businesses succeed, Tesla could look very different in a few years.
But at 185.6x forward earnings, investors are already paying for a lot of that success.
And that's where I struggle.
Too much uncertainty. Too much competition. And too much future success already priced in.
That's why I wouldn't put a dollar into Tesla at this valuation.
Michael Proffe has spent 30+ years beating the market and identifying powerful market trends.
He turned €30,000 into €29 million with his trend-following strategy.
Now, he’s zeroed in on 3 stocks he believes could be major beneficiaries of AI’s next phase — and they’re probably not the names you’d expect.
Support my research by checking out today’s sponsor. ↑
Portfolio Update
Banks can act as an early warning sign of economic stress. And the KBW Nasdaq Bank Index is down 13% from its August peak. Nothing to panic about yet, but worth keeping an eye on.
Cash still at 20%. No major buys or sells planned.
Elsewhere
💰 Berkshire Hathaway has invested nearly $1 billion in a company that went public just three months ago. Buffett leaves, and suddenly unfamiliar tech stocks are on the menu. (Yahoo Finance)
📉 Paul Tudor Jones says 2027 could be a challenging year for the stock market. I share his concerns. (CNBC)
🚀 Elon Musk says Tesla’s new Roadster can fly, drive upside down and perform barrel rolls using SpaceX thrusters. Looks cool, but does it create shareholder value? (Yahoo Finance)
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