How much was Elon Musk’s pledge to step back from DOGE worth? $67 billion to frustrated Tesla shareholders
Although perma-bull most of the analysts that cover Tesla have warned of serious failure of Q1 results, a view signed by a poor delivery for the quarter reported in early April.
But the numbers released after near the market on April 22 are much, worse than expected.
Automotic sales fell 20% in the same period last year to $ 14 billion. Despite a powerful 12-month gain in its industrial and residential battery storage franchise, the overall income has dropped by 9%. Falling sales with hammered profitability, which sends net income to nearly 40% to a Piddling $ 409 million, which is less than $ 600 million Wall Street forecast, and one-sixth what Tesla has earned recently as Q2 of 2023.
When the results fall into this disaster of “consensus,” it is almost a given stock crater on the following days. But the Musk presented another show success to save on the sun. At the conference call he declared that, beginning in May, he would return from his role as President Trump's spending on Doge, and would “spend more time with Tesla.” The richest man in the world has also succeeded in moving the look of investors from the miserable new numbers to the rich promise of the coming things, declaring that a long-awaited version of the Model Y Sports vehicle will come later this year, and the Tesla Robotaxis will release passengers around the town of Austin starting 2026.
So when the NYSE CLOSING Bell rang Thursday, April 24, Tesla's sharing jumped 9% from the level before the Q1 report to $ 260. On that day-and-a-half span, Tesla added $ 67 billion to the market cap, to raise its appreciation to $ 836 billion.
The Rub: Tesla's shares look radically overwhelmed before it is unlikely to spike. Here's why.
In the previous quarter, Tesla lost money to its 'hardcore' businesses
Tesla products are now producing Austin, Berlin, and Shanghai only explain a small portion of its appreciation. And their fortunes are falling quickly. The rest – which is even more pricier in disobedience to Q1 debacle – can be called “Musk Hope Premium.”
Following the bad, but not-close-as-bad Q4 report, this writer introduced a new concept for measuring repeatedly, the bedrock revenues generated by its current businesses-almost exclusively consisting of cars and batteries, along with a small unit of service. To get there, I deleted such once acquired as a huge tax benefit in the last quarter of 2023, and a noncash profit to $ 600 million writing its Bitcoin holders in Q4. Nor do I exclude revenues from selling regulatory credits to competing carmakers, a benefit that Musk himself said will prove ephemeral, no matter how fast its loss remains unpredictable.
What we call these “hardcore” income shows how many Tesla's massive caps are justified in what is being done today, and how much it owes to the “Musk Hope Premium,” the CEO's promises of celebrity for full self-driving software and vehicles for Tesla consumers, and commercial robotaxis. So far, those assurances have proven to be an ongoing reaches.
To get the “Hardcore” number, I started with a net income of $ 409 million, and deducted the income after tax from the sale of regulatory credits. That result is $ 433 million, and costs more than 100% of Tesla's total revenue. By my calculus, tesla lost $ 13 million making and selling cars and batteries in Q1. This is the first time it has happened since 2020.
For the past four quarters, Tesla posted a “hardcore,” hopefully “repeat” $ 3.5 billion. Therefore, it now sells with a suited P/E of 240 (the $ 836 billion appreciation divided by my income number of $ 3.5 billion). By the way, at its peak in 2022, Tesla's “hardcore number” for the year was nearly $ 12 billion, more than three times what it has achieved in the last 12 months.
Let's give the car-battery business a P/E of 20, twice the average world industry, to be generous. That puts the value of the current UP-and-running operation at $ 70 billion. The whole difference of $ 766 billion is essentially a blind vote of confidence that Musk will deliver years of income growth from it is rarely witnessed in the records of capitalism and never achieved by a player of Tesla's age and size.
If you want a 10% return from it, Tesla's stock price needs to double from $ 260 to $ 520 in seven years. Of course, the Musk machine almost got there a few months back. But the future looks a lot of dimmers now than it was done on the weak days following Trump's election. Pressing the mark means the Tesla market cap should also double, at more than $ 1.6 trillion. In A, once again, the generous forecast of a 30 p/e, the revenues required is over $ 50 billion. Cars won't do it. Tesla needs to earn half of what Apple has now developed in products that do not advance from drawing boards and prototypes in showrooms.
Musk looks like again is the investors thinking
The Tesla Q1 statement blames the compassionate -performance in “uncertainty in automotic and energy markets [that] Continue to increase as rapidly emerging trade policy affects the global supply chain and the cost structure of Tesla and our peers. “In other words, Tesla blames the Musk boss in the White House.
In the musical movie The music man, Slippery salesman Harold Hill attracts the good town to the Acts -Create of the River City Payment for the shipment of trombons and clarinets that are always coming. Hill's Wordplay planted visions of a glorious marching band that was intoxicated with his listener. Elon Musk's music was nothing.
This story was originally featured on Fortune.com
