Tesla's (TSLA 2.97%) market cap of $1.5 trillion is far ahead of that of the next-most-valuable car company. The market remains decidedly optimistic about founder and CEO Elon Musk's vision.
Since its initial public offering in June 2010, this electric vehicle (EV) stock has skyrocketed 25,390% (as of Feb. 2). A starting capital contribution of $4,000 would be worth $1 million today.
Maybe the business has much more upside going forward. Is Tesla your ticket to becoming a millionaire?
Image source: Tesla.
The core business continues to struggle
By now, investors are all too familiar with the struggles Tesla's core operations, selling EVs, are experiencing. Deliveries declined 9% in 2025, leading to a 10% year-over-year fall in automotive revenue. This is uncharted territory for the business.
Tesla, which was once operating in a very empty field, now faces competition from domestic and international players. It has to compete more on price, which puts pressure on margins. It also doesn't help that the overall EV market is starting to register decelerating growth, as there are large numbers of consumers who still have an affinity toward gas-powered and hybrid cars.
The stock's valuation is not rooted in this reality. As of this writing, Tesla trades at a price-to-earnings ratio of 390. Combine a high price tag with fundamental challenges, and any reasonable investor would surely be pessimistic.
NASDAQ: TSLA
Key Data Points
Investors have huge expectations
Given its nosebleed valuation, the market is betting on monster success in other areas for this business at some date in the future. In other words, expectations could not be higher. And to say that prospective investors have no margin of safety would be putting it lightly. Tesla must execute flawlessly to maybe justify the valuation.
If Tesla makes good on its promises regarding robotaxi and robotics success, there's a chance, no matter how small, that the stock is a big winner in the next decade and beyond.
Musk once said that a global robotaxi fleet would experience "quasi-infinite" demand. The Cybercab production line has been set up to fulfill this dream. The company plans to launch its self-driving ride-hailing service in new cities this year.
And he has high hopes for the Optimus robot. "I think long-term Optimus will have a very significant impact on the U.S. GDP," Musk said on the fourth-quarter 2025 earnings call. Tesla expects production of the Gen 3 version of Optimus to start sometime this year.
Betting against Musk has been a losing game in the past. However, I think the current valuation is still too expensive to buy shares at this point. And investors should avoid banking on a single business to be their ticket to becoming a millionaire.
