(Bloomberg/Esha Dey and Jordan Fitzgerald) — Elon Musk may be trying to pivot Tesla Inc. away from electric vehicles and toward humanoid robots, but to skeptical investors there’s no hiding from its stagnating sales and eye-watering stock market valuation that leaves little room for error.
Eager to transform the carmaker into an artificial intelligence powerhouse, Musk earlier this month declared on his social-media platform X that about “80% of Tesla’s value will be Optimus,” referring to the company’s robot initiative. But that’s for the future. In the here and now, Tesla’s 2025 earnings are expected to sink nearly 30%, while its robotaxi business is still years from turning a profit and faces stiff competition from Alphabet Inc.’s Waymo, among others.
“You can pin any kind of valuation to robots at this point,” said Thomas Thornton, founder of Hedge Fund Telemetry. “The markets have not done an ounce of research on robots. What companies are out there? How good is their technology? How much are they making? And is there really a demand for personal robots?”
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Tesla’s performance has suffered an industrywide EV slowdown that hit in 2023 and worsened in 2024. But at the same time, its stock has gotten increasingly expensive. The shares are priced at around 155 times the company’s earnings over the next 12 months, roughly where they were during the tech frenzy in 2021, the year Tesla’s market value first crossed the trillion-dollar threshold driven by optimism around EVs becoming mainstream.
Priciest Stock
That valuation makes Tesla by far the priciest stock in the Magnificent Seven, which also includes tech giants Alphabet, Amazon.com Inc., Apple Inc., Meta Platforms Inc., Microsoft Inc. and Nvidia Corp. The next closest company in the group is AI chip giant Nvidia at 31 times forward earnings. Among all US-listed stocks worth at least $100 billion, only Palantir Technologies Inc. trades at a higher multiple.
“Tesla is priced like a growth company but has seen little meaningful revenue growth in the past two years,” said Dmitry Shlyapnikov, an analyst at Horizon Investments who works with portfolio managers. “Elon Musk needs to provide a different growth story for investors. And Optimus is the answer.”
That explains why Musk’s unprecedented $1 trillion pay package leans heavily on Optimus robots. But you can’t blame Tesla investors for feeling a sense of whiplash as Musk keeps changing his pitch as to what the company will be.
The first bet was on Tesla dominating the electric-vehicle business globally, which it did for a while. In April 2024, Musk changed his ambitions, declaring that self-driving vehicles would be the company’s main focus. Investors lapped it up, sending the stock soaring.
Then came the CEO’s all-out support of President Donald Trump during his 2024 bid for the White House. When Trump won, it sparked a gigantic rally in Tesla shares on hopes that Musk’s proximity to the administration would ease any hurdles blocking Tesla’s self-driving ambitions.
‘Elon Exposure’
Fast forward to today, and Musk is no longer involved with Trump, while Tesla’s autonomous driving effort is sputtering. The company had trouble on day one launching a robotaxi service with a handful of cars in its adopted hometown of Austin. Its ride-hailing service in California isn’t driverless, and starting up in new cities is taking time. On Thursday, Tesla was approved to start testing autonomous vehicles in Nevada.
However, the path to adoption of self-driving technology looks rocky — and confidence in Tesla’s ability to dominate that field is waning.
In the meantime, Tesla’s car sales have been slowing globally and fears of stricter auto tariffs have battered the stock price. The shares are down about 25% from their mid-December high and have been trading in a tight range since mid-May. They’re down over 10% this year, putting the company among the 100 worst performers in the S&P 500 Index, which is up 12% for 2025.
“Tesla has never been valued strictly as a car company and instead as a bet on Musk’s ability to bring a sci-fi future to life,” said Steve Sosnick, chief strategist at Interactive Brokers. “The promised robotaxi revolution doesn’t seem to be enough, so a pivot to humanoid robots is another move to try to make that happen.”
Whether Musk’s renewed focus on Optimus can shake the stock out of its torpor is up in the air, particularly since a key piece of Tesla’s problem appears to be its technology. For example, the flush door handles, mechanical releases and electrical power that are hallmarks of Tesla cars and trucks can be deadly in crashes because drivers and passengers have struggled to get out of the burning vehicles, Bloomberg reported this week.
Of course to many investors, Tesla’s value is about more than just electric vehicle sales or numbers on an earnings report. To them, it’s really a bet on Musk’s ability to keep making money as the future of transportation and technology keeps transforming.
“If you truly believe that Elon Musk is a genius that will change the world with his inventions, there is no other stock to buy,” Horizon’s Shlyapnikov said. “Investing in Tesla is the only way to add ‘Elon exposure’ to a public portfolio.”
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No major earnings expected
–With assistance from Subrat Patnaik.
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