To The Moon

$Tesla Motors(TSLA)$

Tesla shares have dropped 27% from their highs over the past three months, leaving many investors wondering why the stock is declining. Some may have believed that simply buying Tesla stock would lead to a $10 trillion company, as Elon Musk has suggested—but what's really happening?

Tesla CEO Elon Musk appears to be on a financial downward spiral, driven by what some call "bottomless insecurity." Today's headlines paint a dire picture: Tesla stock plunged 6.34% today alone, at one point dropping as much as 7%. Year to date, it’s down 18.66%, and from its peak on December 17, 2024, to today (February 11, 2025), it's taken a staggering 31.54% nosedive.

Put simply, Musk is in serious trouble. In fact, OpenAI CEO Sam Altman recently commented on Musk’s mindset, stating, "Elon tries all sorts of things for a long time. This is just the latest episode. Probably his whole life comes from a place of insecurity. I feel for the guy—I don’t think he’s a happy person."

This situation could mark one of the most dramatic financial collapses in history. Musk is now scrambling for solutions, including an ambitious—and highly questionable—attempt to acquire OpenAI. Somehow, he claims to have secured $97.4 billion from an undisclosed source to make this happen.

Meanwhile, Tesla is faltering for multiple reasons:

1. Musk’s Public Image – He’s alienating people and governments worldwide.

2. Intensifying Competition – Automakers from Korea, Japan, Europe, the U.S., and especially China (with BYD leading the charge) are offering electric vehicles at a fraction of Tesla’s price. BYD, for instance, recently announced EV technology similar to Tesla’s at one-third the cost.

3. Lack of Focus – Even if you agree with Musk’s politics, it’s clear that Tesla is no longer his priority.

Musk’s fortune is tied to Tesla stock, and its continued decline threatens his financial standing. Unlike a traditional CEO, he takes no salary, instead relying on stock-based wealth and loans secured against his holdings. With Tesla’s downward trajectory and Twitter’s financial struggles, he’s now looking to borrow more—possibly to fund his OpenAI ambitions. But OpenAI isn’t even for sale, and its CEO, Sam Altman, isn’t having it. Altman reportedly reminded employees that "Elon has a history of making claims that don't hold up," referencing Musk’s exaggerated donations and shifting narratives about OpenAI’s transition to a for-profit model.

On top of all this, Musk is picking fights with the legal system, tweeting grievances about judges and government rulings. In a bizarre move, he even changed his Twitter name to “Harry Balls”, coinciding with the release of yet another meme coin. Whether this is a joke, a marketing stunt, or insider trading is anyone’s guess.

At this point, Musk's core fanbase seems to consist of teenagers, bots, and state-sponsored influencers looking to stir the pot. Meanwhile, his critics—including OpenAI leadership—continue to expose his erratic behavior. One thing is clear: Tesla is in trouble, and Musk's financial future is looking shakier by the day.

Elon Musk's business, particularly Tesla, is built on smoke and mirrors—selling technology that doesn’t work as promised and making grand claims about the future that never materialize. Essentially, it operates as a vaporware company and a stock-selling machine.

When people say we should run the government like a business, is this really the model they have in mind? Is this what we want for the U.S. government? Running things based on empty promises and misleading projections? That’s not a sustainable or trustworthy approach.

Now, as Musk faces challenges at Tesla, he’s shifting focus to a new target: Social Security. There are growing concerns that he could push for significant budget cuts, potentially slashing it by a third. Today, Democrats held a protest outside the Social Security Administration, urging Musk to keep his hands off Social Security.

Musk, on the other hand, has been tweeting mockingly about the issue, posting memes and dismissing concerns with statements like: "For damn sure, I'm 1,000% more trustworthy than deep-state bureaucrats misusing your Social Security number right now."

He also claims that fraud within Social Security, Medicare, Medicaid, welfare, and disability programs exceeds all private scams combined. This rhetoric suggests that he’s gearing up to push cuts across these essential programs—potentially taking money from millions of Americans under the guise of "fighting fraud."

The truth is, Musk is looking for ways to fund his own ventures, whether it’s risky space projects or AI that threatens to replace jobs. He frequently amplifies voices like Mario Nawfal and celebrates figures like Joe Rogan while aligning himself with crypto and Dogecoin enthusiasts.

At the end of the day, the question remains: Should someone like Elon Musk have any influence over Social Security and public benefits? And if so, at what cost?

Declining Of Tesla

As I mentioned earlier, Tesla’s stock has fallen nearly 27% in the past three months, while the S&P 500 has only declined by 8%. This means Tesla has significantly underperformed the broader market. But why is that happening?

The primary reason for the stock's decline is weakening sales. In January 2025, Tesla’s UK sales dropped nearly 12%, even as overall EV registrations in the region hit record highs. In other words, Tesla is losing market share to competitors. Similar declines occurred across Europe:

• France: Down 63%

• Sweden & Norway: Down 38%

• Netherlands: Down 42%

The trend isn't limited to Europe. In California, the largest U.S. car market, Tesla’s sales dropped by 12% in 2024. Meanwhile, in China, deliveries fell 15% in January, while rival BYD's sales surged by 49%. Given China’s status as the largest EV market—and the only one where EVs are genuinely in demand without heavy subsidies—this decline is particularly concerning.

Tesla’s stock price often follows a pattern: when real numbers are released, the stock falls, but when future promises and ambitious projections dominate the narrative, the stock rises. Right now, investors are facing reality—falling sales, declining margins, and intensifying competition.

Tesla's Financial Performance

Looking at long-term revenue growth, Tesla reported just 2.15% revenue growth in the most recent quarter. That’s a sharp decline from the 60-100% growth rates seen pre-pandemic. Although Tesla saw a temporary boost during COVID due to supply chain issues at rival automakers, that advantage has since faded.

Meanwhile, Tesla’s operating margin has fallen from 20% in 2023 to 7.94% in the most recent quarter. This decline is expected to continue, as Tesla is prioritizing volume growth through price cuts, discounts, and incentives—reducing profitability.

The company’s cash flow from operations has also declined, though Tesla is mitigating this by scaling back new manufacturing investments. While they originally planned to build a facility for a $25,000 budget EV, they now seem hesitant, likely because they can't produce and sell the vehicle profitably at that price point.

Return on Invested Capital (ROIC)

A key metric for evaluating a business is its return on invested capital (ROIC). Tesla’s ROIC spiked above 20% in 2023 due to unique pandemic-era circumstances but is now declining, reflecting falling EV sales, increased spending on incentives, and weaker profitability.

Tesla’s Future Outlook & Valuation

Tesla's forward price-to-earnings (P/E) ratio has dropped from 160+ to 86, making it somewhat more reasonable but still expensive compared to peers. At its peak, the stock was priced as if Tesla would guaranteed achieve fully autonomous driving and robotics dominance—assumptions that are far from certain.

I’ve updated my discounted cash flow (DCF) valuation for Tesla. Previously, I estimated Tesla's intrinsic value per share at $44-$45. With improved free cash flow projections for 2027-2029, I now calculate an intrinsic value of $82 per share.

More Challenges Ahead

Right now, Musk is facing another major lawsuit—one of many. He’s also under scrutiny for what some are calling the largest data breach in history. His situation is so dire that reports suggest he has around 20 bodyguards, even needing them to escort him to the bathroom.

Yet, despite all this, Musk continues to push the same narratives—tweeting about space travel and grand visions of Mars. It’s a distraction, a cult-like illusion that keeps his supporters engaged. Many of them say they admire him simply because he’s rich or because his stock made them money. But unless they sell, that "money" is just numbers on a screen—just like Elon’s own paper wealth, which can vanish in an instant.

Ironically, Musk himself can’t even sell much of his Tesla stock right now. His compensation package was struck down for misleading investors, essentially locking up his shares. This whole situation is a fascinating meltdown in real-time. As Sam Altman put it, Musk has "bottomless insecurity," and from the way things are going, he may be on a path to bankruptcy.

Conclusion

The stock is still overvalued in my opinion, but it’s no longer in the “grossly overvalued” category. I wouldn't buy at these levels, but I also wouldn’t necessarily recommend selling unless Tesla makes up a disproportionately large part of your portfolio.

What do you think? Let me know your thoughts, and I’ll catch you in the next one.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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