Tesla: King of Meme Shares? Placing Retail Buyers at Main Danger?

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Final Up to date on: twenty second March 2025, 12:25 pm

There are meme shares after which there are meme shares. A key factor of a meme inventory is that it has an enormous quantity of decentralized, retail, normal-folk followers and traders. A sizzling social media pattern is rolling, and the meme inventory advantages. One other factor is usually that the inventory worth (or, extra exactly, the corporate’s market cap) is method out of whack from the corporate’s precise funds.

Let’s take a fast instance of what usually occurs with a meme inventory. Let’s have a look at the 5-year inventory pattern for AMC, the beloved movie show chain. I like going to the films, and I like AMC, however there’s no denying that AMC has confronted numerous challenges from the rise of streaming, the COVID-19 pandemic, and the continued rise of streaming. One way or the other, nonetheless, the inventory turned a large meme inventory that “benefited from” a large inflow of investments in 2021. The next are two graphs which might be the identical — a 5-year inventory worth graph. I simply put the marker somewhere else to spotlight the inventory worth at these instances.

As you may see, on March 20, 2020, the worth of AMC inventory closed at $14.07. Then, a yr and 1 / 4 later, the worth had spiked to a excessive of $261.44! Wow, what a acquire! On the time, a standard narrative was about how the meme inventory was profitable and proving conventional inventory market analysts and traders unsuitable. Dumb previous white-hairs — didn’t perceive how the market was evolving! AMC inventory was going to win, as a result of a large group of obsessively on-line dudes was making it win.

Nonetheless … the inventory is now at $3.04. It appears just like the inventory worth stayed above that preliminary worth of $14.07 for lots longer than many critics of the meme inventory pattern would have anticipated. I imply, although it clearly declined from June 2021, it was nonetheless comparatively excessive via the tip of 2021, and even deep into 2023! Nonetheless, ultimately, the precise funds and enterprise case for the corporate apparently caught as much as it.

What’s all this acquired to do with Tesla, an organization making a wholesome revenue quarter after quarter? The corporate has completed very nicely for itself the previous a number of years, and it offered virtually 2 million automobiles two years in a row.

Effectively, Tesla’s P/E ratio remains to be a number of instances larger than rivals’ (it’s virtually 18 instances larger than Ford’s, virtually 18 instances larger than BMW’s, virtually 16 instances larger than GM’s, about 3.65 instances larger than BYD’s, and 40 instances larger than Porsche’s), and it’s market cap ($779 billion) is greater than $100 billion above Ford’s ($39.74 billion), GM’s ($49.55 billion), BMW’s ($54.83 billion), Volkswagen AG’s ($60.79 billion), Honda’s ($52.63 billion), Toyota’s ($299.7 billion), Hyundai’s (36.03 billion), Kia’s ($25.96 billion), Geely’s ($23.64), Xpeng’s ($20.71), and NIO’s ($9.39) mixed.

Is Tesla price greater than all of these firms mixed?

Notably, as you need to know, Tesla gross sales dropped globally in 2024 in comparison with 2023. To date in 2025, they’ve dropped much more. Tesla robotaxis are a couple of decade late. BYD has handed Tesla in gross sales of full electrical automobiles (and sells a ton of plugin hybrids as nicely). Most of those different automakers are seeing their EV gross sales rise whereas Tesla’s decline. The long-held narrative that Tesla’s gross sales would preserve rising quick whereas legacy automakers’ gross sales collapsed, justifying this sort of warped market cap comparability, could possibly be revived — however prior to now year-plus, it’s fully off the mark.

Tesla’s nonetheless a massively worthwhile firm sitting on a ton of money, however all the developments have been within the unsuitable path.

The concept — the justification — is that Tesla is on the verge of breakthroughs in self-driving/robotaxis, robots, and AI. That’s the one justification for Tesla’s tremendous excessive inventory worth and market cap, and Elon Musk has no less than stated the identical factor for the previous couple of years. He is aware of that Tesla’s auto enterprise just isn’t competing nicely sufficient with EV leaders in China, and even with legacy automakers in Europe and the US anymore. It’s all about one other bet-the-company breakthrough.

One could possibly be forgiven for pondering Tesla’s completed it earlier than below Musk’s management and can do it once more. However I feel we should always remember the fact that the Tesla story and mission was primarily based on some fairly stable information earlier than, and plenty of EV fans might see the plan taking part in out. EV powertrains had been merely higher at their essence — extra environment friendly, thrilling instantaneous torque, easier — and it was only a matter of driving down battery prices over time whereas scaling up manufacturing and demand. So long as the core know-how adopted the training curve anticipated, EVs would win. Tag on the sturdy curiosity worldwide in stopping world heating and supporting zero-emissions know-how and also you’ve acquired a reasonably clear path ahead. Sure, it’s laborious to fabricate issues, it’s a lot more durable to mass manufacture issues, and cars are particularly laborious to mass manufacture. It was definitely no simple job to do what Tesla did! Nonetheless, the trail was clear.

Now, the argument is that Tesla’s “Full Self Driving” ought to give you the option to have the ability to get to robotaxi functionality forward of others simply with cameras and AI — no lidar, no radar, no downside. Others within the subject have disagreed for years, and there are even robotaxis which were working for years that preserve increasing their territory. However with a bit extra of a breakthrough, the dream is that Tesla will have the ability to flip a change and switch hundreds of thousands of buyer automobiles into robotaxis in a single day. Additionally, regardless of there being numerous competitors within the robotics market, there’s a hope and a want that Tesla is much forward of the competitors and can have the ability to make a multi-billion-dollar enterprise out of its tremendous particular robots.

Possibly that’s all true. Or perhaps Tesla has simply was the king of meme shares — supported considerably deceivingly by its profitable (however dwindling) electrical automobile enterprise, however with hundreds of thousands of traders mainly betting on Tesla attaining some minor miracles in AI and robotics.

Tesla inventory has been crashing in 2025 as the corporate’s disappointing gross sales numbers have come out and Elon Musk’s loopy political antics have taken heart stage. Nonetheless, at the same time as there’s been a large selloff, retail traders have piled into the inventory to a notable diploma. A headline yesterday from Bloomberg acknowledged, “Tesla’s Retail Followers Purchase the Inventory at a Tempo By no means Seen Earlier than.” Hmm…. “Tesla Inc.’s inventory is in a freefall. Its gross sales are plunging world wide. Even its most avid Wall Road bulls are turning cautious. However one group is shopping for the electric-vehicle maker’s shares like by no means earlier than: CEO Elon Musk’s followers,” the article begins. That sounds fairly meme stock-y to me. What do you assume?

“The corporate has lengthy had an ardent fan base of particular person traders who grasp on Musk’s each phrase on X, the social-media platform he owns. They analyze Tesla in nice element in on-line boards and largely perform as a hype crew for the inventory.

“However their present degree of enthusiasm is staggeringly excessive, even by current historic requirements. Particular person traders have been internet patrons of Tesla shares for 13 straight classes via Thursday, pumping $8 billion into the inventory, retail buying and selling knowledge from JPMorgan Chase’s world fairness derivatives strategist Emma Wu reveals. That’s the largest influx over any shopping for streak since 2015, which is way back to the information goes.”

Wow.

In fact, this has occurred whereas the inventory has been rolling off a cliff. “What makes the retail shopping for notable is Tesla’s share worth has sunk 17% over this time, wiping out greater than $155 billion from its market worth.”

These of us who’ve adopted the inventory for years know the chorus nicely: “Purchase the dip!!” It’s all the time only a dip and a chance to purchase! The inventory will rise for years to come back, however then when there are vital drops that apparently make no sense, it’s simply an apparent shopping for alternative! “Diamond fingers! Purchase the dip! Don’t lose religion! The divine and immortal Elon will all the time win!” Clearly, many retail traders are all-in on these arguments.

So long as the corporate is earning money, there’s nothing to fret about anyway. It’s nearly ready out the unhealthy press. As we’ve seen even with AMC, even fully illogically believing in an organization regardless of market dynamics and its out-of-date enterprise mannequin can prolong for an absurdly very long time. There’s nonetheless an opportunity Tesla gross sales rebound with the brand new Mannequin Y and one other new mannequin. Maybe a few of the different enterprise divisions begin to make some huge cash, too. Nonetheless … if Tesla gross sales and funds proceed to go within the unsuitable path, there’s a stable chance that Tesla income shift to Tesla losses. If that occurs, what subsequent?

If Tesla is the king of meme shares, its reign could possibly be cheered for years, however it might nonetheless find yourself seeing the destiny of different meme shares, proper? The corporate clearly has numerous the qualities of a meme inventory. It’s been referred to as that numerous instances for years for a cause. It could even be a “meme firm,” and benefiting from that, however humorous cat movies used to rule the web — after which folks acquired extra taken with different issues and algorithms modified. Blackberry used to rule the cellphone market. Kodak was the king of pictures. I do know, these comparisons have been used loads of instances to forecast Tesla’s future in comparison with legacy automakers’. However what if Tesla is extra of a Blackberry than an Apple? What whether it is certainly being handed up by sooner innovating, extra neatly managed rivals?

What if the largest cause for its huge market cap has all the time simply been that it’s essentially the most magnificent meme inventory in historical past?

Aspect notice: We’ve additionally now acquired a trump appointee, U.S. Commerce Secretary Howard Lutnick, telling folks “Purchase Tesla” (an unlawful promotion of a personal firm by a federal worker, after all) and claiming “It should by no means be this low cost.” Effectively, when have Trump World associates ever been recognized to commit crimes, commit fraud, or be tremendous unsuitable? It’s absolutely not a determined plea to avoid wasting his personal butt, proper?