Tesla Stock Crashes Like a ‘Soufflé Under a Sledgehammer’ – Just as Musk Predicted
Tesla’s stock (TSLA) is taking a massive hit today, dropping by as much as 8%. And guess what? Elon Musk actually saw this coming. He once warned that Tesla’s stock could crash “like a soufflé being smashed by a sledgehammer” if the company didn’t show profit growth—and that’s exactly what’s happening right now.
For weeks, there have been concerns about Tesla’s sky-high valuation. If the stock didn’t fall, Tesla would have been trading at a P/E ratio over 500 after Q1 earnings—an unsustainable level for any company, let alone one facing slowing sales. Now, the market seems to be catching up to reality, and Tesla’s valuation has officially dropped below the $1 trillion mark.
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Some analysts are linking this crash to weak European sales, which have plunged by 50%. However, this decline has been evident for weeks, so today’s drop is more about investor sentiment shifting and expectations for lower earnings.
On the bright side, Tesla did roll out a new Full Self-Driving (FSD) update in China, which might help justify recognizing some deferred revenue. But it’s not all good news—early reviews of the update have been mixed, and it's unclear whether it will have a significant impact on the company’s bottom line.
The real problem here is Tesla’s valuation compared to its earnings. Even after today’s drop, TSLA is still trading at a P/E ratio of around 150. For context, Toyota trades at a P/E of 7, and even a tech giant like Meta is around 40. Historically, stocks with such inflated ratios don’t hold their value—especially when earnings are declining, which seems to be the case for Tesla.
Looking ahead, the stock could continue to slide as analysts adjust their earnings expectations for Q1. Many are still forecasting over 400,000 deliveries, but the actual numbers could come in lower. Investors are also hoping Tesla’s planned robotaxi launch in Austin this June will boost the stock, but some critics believe this is just another case of Elon Musk “moving the goalpost.”
So, where does Tesla go from here? If the stock continues to drop, it might force a real conversation about leadership changes at the company. Right now, the board and shareholders don’t seem too concerned—but if this downward trend continues, they may have no choice but to start paying attention.
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