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Is Tesla stock MAGA overpriced? When will Tesla stock go down?

January 21, 2025

Is Tesla stock MAGA overpriced?

Absolutely. Tesla is trading at more than double its "true" market value. There's no "true" value because valuation is an intersubjective assessment between buyers and sellers in the marketplace. In reality, the "true" value is whatever the current value is. If the market wants Tesla shares to be valued at $1.34 trillion with shares selling at $426, that is the "true" value. However, that "truth" is not set in stone and is subject to change (up or down) at any point in time. We believe that Tesla is "supposed to" go down to about 30% its current market value. Whether the market will agree with us is both unknown and unlikely.  

Is Tesla stock supposed to go down now that Trump will end the federal preference for electric vehicles?

Yes, Tesla stock is supposed to go down, but that doesn't mean that it will. 

On January 20, 2025, President Donald Trump dealt a massive blow to Tesla and the electric vehicle industry. President Trump declared a "national energy emergency" to boost fossil fuel infrastructure and production. As part of this initiative, Trump announced in his inauguration speech that he will eliminate the discrimination against non electric vehicles so that Americans can freely decide what type of car they want to buy. 

Under the Inflation Reduction Act (IRA) enacted during the Biden administration, consumers were eligible for federal tax credits of up to $7,500 for new EV purchases and up to $4,000 for qualifying used EVs. These incentives aimed to promote the adoption of clean energy vehicles and reduce greenhouse gas emissions. These programs were benefiting Tesla and the EV industry. 

The Trump administration will work to end the subsidies for electric vehicles and review regulations perceived as obstacles to fossil fuel energy production, which were indirectly helping the EV industry. This policy shift indicates a move away from the previous administration's support for EVs, potentially impacting very soon the availability of federal tax credits and other incentives for electric vehicle purchases. 

Tesla is MAGA overpriced.

With or without incentives for EVs, Tesla is MAGA overpriced. Several financial analysts and experts believed that Tesla was overpriced even before the MAGA artificial boost that the stock received after the election victory of Donald Trump. Elon Musk had become the main billionaire musketeer in the MAGA camp, metaphorically in bed with the MAGA world. Musk donated about $200 million to the Trump campaign and participated in MAGA rallies. After Trump's victory, Tesla's stock skyrocketed to unprecedented levels. Musk's investments in Trump's campaign paid handsomely well in the stock market. Musk made almost $100 billion from his $200M investment in Trump. 

The increasing competition within the electric vehicle (EV) industry and escalating geopolitical challenges pose substantial risks to Tesla's business model, potentially impacting its market share and profitability. 

Tesla's stock is trading at approximately 130 times the estimated 2025 earnings, indicating a high price-to-earnings (P/E) ratio compared to traditional automakers. This suggests that the stock price may not be justified by current earnings. Some analysts believe that Tesla's stock price reflects overly optimistic assumptions about future growth, particularly in areas related to AI like autonomous vehicles and energy storage, which may not materialize as expected. 

Is Tesla really an AI company?

It is not. Even assuming that Tesla is somehow an AI company, it would be significantly overpriced also. Analysts suggest that other companies in the AI and technology sectors may offer more reasonable valuations and growth prospects compared to Tesla, indicating that Tesla's stock may be significantly overpriced even if priced as an AI company rather than as an automaker. 

Will Tesla do down?

Yes, it will, but no one knows when or how much. We believe that Tesla's stock is significantly overpriced, with its current valuation not aligning with traditional financial metrics and market realities. Trump's national emergency ending the subsidies and preferential treatment for EV cannot help Tesla in any rational way. The market should wake up or be woke about the anti-woke heroe Elon Musk. Tesla stock should begin to go down sharply tomorrow and continue stumbling down for a while until it reaches a fair and reasonable valuation of under $200 per share.

We'll see. 

www.creatix.one

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