Hey everyone. I'm trying to wrap my head around why Tesla's stock is so insanely high with the outlook looking not so great. People keep buying it and I can't understand why, other than people are buying it for a long term AI holding. If thats the case, isn't there FAR better stocks to buy?
https://www.nasdaq.com/market-activity/stocks/tsla/price-earnings-peg-ratios
Even looking at 2025, the stock still looks very overpriced at a forward PE of 55.4. PEG ratio is 5.11, lol. I don't know that I've seen a PEG ratio that high before.
There's also some headwinds for Tesla. They recently lost the federal tax credit on most of their lineup. This will undoubtedly affect sales and their margins, but admittedly they should remain profitable without the tax credits. IIRC one of the articles I read said that, without the credits, their margin is around 30%, which is still higher than most auto manufacturers. But still, for this company being valued higher than any other auto manufacturer in the world, even ones that sell exponentially more vehicles, I still don't see how the stock price equals reality.
There has been a slowdown already in electric vehicle sales that will most likely be accelerated by losing the tax credits. Granted that's not all Tesla's fault. We are still a few years away from viable Li-Ion alternatives being ready for mass adoption. Until that happens, the cost of the batteries and rare minerals to make them will remain the biggest hurdle they face. Not to mention hydrogen powered hybrids are slated for mass production starting next year. Electricity rates are constantly increasing. Even if you have a bunch of solar panels, you still paid for that electricity, even if it's cheaper than what you're getting from your utility company. Whereas water is the most abundant resource on the planet. The advantage here does not go for pure electric vehicles IMO.
As far as the AI angle, are they really a competitor when they still only have level 2 autonomous driving? Seems to me like Google would be an infinitely better stock for the AI angle since they are expanding to level 3 and 4 autonomous driving, no? Even if they don't plan on making vehicles, Google seems like the no brainer here and it has very realistic valuations. If im wrong here, please explain why. This post isn't to shit on Tesla stock. I genuinely want to know if I'm wrong and why. Thanks everyone!
