Tesla (TSLA -0.67%) might be the most discussed stock in the history of stocks. You might think there's nothing new to be said -- and that investors should just buy it and hold on.
But as someone who has been watching Tesla stock since its IPO in 2010, I think the forces moving the stock have changed a great deal in the last several years -- and I think the bull case for Tesla has some big problems.
For starters, Tesla's sales aren't going in the right direction. But there's a deeper reason to think twice about Tesla stock as well.
Image source: Tesla.
Tesla's car business is going in the wrong direction
Not too long ago, it was still possible to believe that huge growth was inevitable for Tesla. The developed world was moving quickly toward a zero-emissions future, and Tesla had the best electric vehicles one could buy -- and it was scaling up to build millions more every year. What could go wrong?
A lot, it turned out. Between CEO Elon Musk's foray into right-wing politics, Tesla's aging product line, and the growing number of excellent EVs from other automakers, Tesla's sales have been hit hard. Global sales were down 13% in the first quarter of 2025 from a year earlier. In Europe and China -- arguably the two most critical global markets for EVs right now -- they're down even further so far in the second quarter, while overall sales of EVs continue to rise.
Musk's answer has been to make -- or at least talk up -- an aggressive pivot to robotaxis. Tesla has claimed that its service's costs will be far below market leader Waymo's, in large part because Tesla doesn't bother with the expensive lidar sensors that Waymo considers critical to safety.
While an optimist might say that cost advantage will lead to market domination, a more realistic view is that Tesla is taking a huge safety risk by sticking with its camera-only system -- a risk that the robotaxi business could end abruptly in a single news cycle if something goes badly wrong.
Of course, with Tesla's valuation currently hovering around $1 trillion (a mere 169 times its earnings over the last year), it's reasonable to think that total robotaxi market domination is already built into the company's share price. That's a problem if the robotaxi push goes awry.
But the real problem with Tesla stock is that none of that matters much anymore.
Tesla's stock price isn't really about its business now
Tesla's valuation these days is mostly a reflection of how the popularity and success of Elon Musk is viewed in any given moment. It's very similar to the dynamics behind meme coins, cryptocurrencies that generally lack any purpose (or put another way, any fundamental value) beyond the cultural value they hold and the communities that surround them.
As my colleague Anders Bylund recently wrote:
Meme coins spotlight the power of community and sentiment in the digital age. Their value is largely driven by social media, celebrity endorsements, and the broader meme culture that thrives on the internet.
Tesla does have some fundamental value, of course -- the car and energy-storage businesses, the (maybe) robotaxi business, and the (someday, maybe, perhaps) humanoid-robot business. But the car business, the part that has generated most of Tesla's revenue to date, is trending in the wrong direction. That's a situation that would drive the stocks of most other automakers down to just a few times earnings.
It hasn't hit Tesla stock that way -- at least, not yet -- because of Musk's outsized public presence and huge promises. But take a step back: If your hope is to buy Tesla stock now and make a fortune, be aware that ship may have long since sailed.
The only reason to buy Tesla now
On the other hand, there's certainly a strong community around Tesla -- and a smaller, but still strong, community of those who remain very bullish on the stock and love to discuss its twists and turns.
If joining that latter community appeals to you, a very small position in Tesla might still be worthwhile. But as a long-term investment, here in 2025 I think you owe it to yourself to find something sturdier than Tesla stock.
Editor's note: This article has been corrected. Tesla's valuation is 169 times its earnings over the last year.
