Why is Tesla Stock Falling

hey everyone me Kevin here today we've

got to talk about Tesla why is the stock

falling what's going on with Elon Musk

what's going on with the valuation of

this company what's going to happen with

full self-driving and frankly the

ability for us to compete with the other

Robo taxis of the world or will Tesla be

the only one let's talk about all of

that and just do a very pointed video

here on Tesla so first things first why

is the stock falling well it could be

because Robin and Kimble musk are

dumping the

stock NOW Robin's on the board Kim musk

elon's

brother they're insiders we have seen in

the past that Kimble musk is pretty

professional at timing uh local tops in

Tesla stock and taking advantage of them

so it's not a great signal however it is

noise if you are a long-term investor as

a long-term investor you should know

that Tesla can be more volatile than

Bitcoin certainly more recently uh and

over its history it has not been exempt

from large swings and valuations

potentially as much as 70% declines and

then of course you get these these

doubles to two and a half xers and you

get these declines again this is normal

this is just what happens with a stock

that is is growing now typically Tesla

should have already matured past this

phase but but you've got some issues

because one of the problems uh that we

face not just from Insider selling is uh

expectation versus reality one of the

expectations is that uh we are going to

get new models of vehicles in 2025 and H

I have been of the mindset that there

will not be a new model in 2025 there

will just be different variants of

existing models and so far I don't want

to be right on this because I really

want a new model of Tesla ideally a

bigger

one uh but uh unfortunately I think

we're going to see the pitch of the

refreshed model y now the launch Series

Tesla as the next model of vehicle or

the seven seat model y being promoted in

Europe to get around those vat taxes

that's that's

great but maybe even a new variant of

the model 3 but these aren't new more

affordable models if anything some of

these models are actually more expensive

now you're getting more with the refresh

series but you're also paying more so I

suppose you can make an argument that

it's more affordable if you want all of

the add-ons like full self driving and

otherwise uh but my question is and and

I think investors will begin to question

this as

well are we actually going to get a new

model in 2025 uh mostly because a more

affordable model is something that's

seen as potentially Reviving sales

growth at Tesla that is rather than

having to wait for the Cyber cab we

could have maybe a 2-year period where

we could actually get back to that 30%

growth now notice two earnings reports

ago Elon Musk told us hey um we should

be growing at 30% in 2025 in the last

earnings report they downgraded that to

we should return to growth in 20 25

H now I'm simply stating facts here that

Elon Musk has also made it clear that a

$25,000 nonfully self-driving car non

full self-driving car non fully self

anyway non robotaxi $225,000 vehicle

would not make

sense well that's probably on one hand

because Elon Musk has the mentality that

we will not uh keep making Legacy Autos

we will keep going Make It or Break It

with full self-driving or and

potentially their Break Even cost on

manufacturing a car is $35,000 so of

course they're not going to make a

$25,000 car when they're breaking even

at$ 35,000 now In fairness that's the

break even for the average of their

vehicles right now so yes if you had a

lower cost vehicle maybe they could get

the break even down to 29 or $30,000 for

that model but they they wouldn't have a

profit at that point and it just doesn't

make sense if they break even 35 now

you'd have to cut a lot I mean divide

that for a moment if your break even on

a car right now is 35 and your break

even on a 20 you know on a lower let's

say your break even was 25 and you sold

it for zero as Elon had alluded to in

the past you'd still have to figure out

how to get the cost down

29% turn it into a two door it doesn't

sell as well in the United States

because people want the flexibility two

doors just usually don't don't do that

well unless it's a roadster you can go

lower battery but people have enough

range anxiety as is I've been a big fan

of lower battery but you can just put

lower battery models in in uh in model 3

and Y versions but frankly I think one

of the reasons they're not doing that

because I've been pounding the table on

this for years that golly sell a you

know sell a a $25,000 car with with 100

miles of range and let that be

somebody's secondary car but I I

actually have come to the realization

that there are two reasons they don't do

that one they want the margins on the

batteries you know they they'll sell you

a ,000 battery for6 or $7,000 basically

that's where the margins are the margins

are in the batteries and as lithium

prices keep plummeting and the cost of

batteries in China keeps plummeting it's

more desirable to pick up your margin on

selling you batteries though even

battery margins are getting whacked you

know you look at uh specifically the

energy sector which is mostly batteries

for Tesla yes some solar as well and

inverters but it's mostly batteries Mega

packs and and home battery

packs their Marin margins on energy have

actually interestingly declined you know

you've gone from an average of around

30% margin uh you know gross margin down

to about 24.6% gross margin so you're

seeing weakness there as well which is

weird but anyway going back to the

$25,000 vehicle and sort of this more

affordable model the more we keep seeing

these variants I think the more the

stock market might be waking up to

say all right doesn't look like we're

going to get a new more affordable

vehicle this year other than you know

variants of EX

models now I could be surprised you know

I don't think it's going to happen but

maybe they'll be uh you know come to our

April 15th event where we announce a new

product great that would be wonderful

and and it would be a a big upside for

the stock like I you'd want to buy Co

YOLO calls that day you know because

people go oh my gosh this this new model

whether it does or doesn't doesn't

matter it's just what people's

expectations are oh my gosh this new

model is going to sell uh and it's going

to bring you know so much it's it's

going to bring Tesla back to growth uh

we're going to grow at 30 40% compounded

again we don't have that right now with

the existing lineup now the good news is

the existing lineup isn't like Panic

selling in terms of inventory uh you are

getting you know some more promotions in

China like Insurance buy downs and

promotions uh again you're getting

Insider selling which is adding weight

the downside weight to the stock uh and

I'm not seeing any panic in used vehicle

inventory uh or sorry even new used uh

sorry new jeez let me give give my words

straight you're not seeing panic in

inventory usually when you look at new

vehicles on the inventory page within

200 miles of where you are and you're

seeing large discounts that's when

they're really trying to get a clearing

event done you you're having a hard time

actually finding some of those right now

uh which which is a good sign uh but it

could also mean that we're just

producing a similar amount to what we're

selling and it doesn't necessarily mean

we're growing right so there are some

issues here uh but again no panck

inventory right now which suggests that

at least in the near term there doesn't

appear to be uh a a an over production

doesn't necessarily mean sales numbers

are going to be great I mean we see

what's going on with Europe

registrations in January in Germany and

France and Spain and the United Kingdom

all these countries are down 30 to 50%

for Teslas now it's a drop in the bucket

for Tesla Global sales because you know

most of their vehicles are sold in the

United States followed by China uh

although byd did just take over Tesla on

pure electric vehicles but

whatever uh there Tesla sells most of

their cars outside of Europe so maybe

that matters less although he's a little

bit of a bummer because there is a

gigafactory called Giga Berlin that is

ideally trying to sell

vehicles in the European market because

you pay less to transport you know ship

them somewhere but whatever so I I I

don't

see uh panic in inventory but I do see

some disappointment in potentially okay

yeah maybe the new model you know new

models are just not going to be a brand

new model I I think disappointment there

is putting weight on the stock down

Insider selling pushing weight on the

stock down now there's more though but

before we get to the more part I I want

to mention that there is a risk also

keep this in mind there is a

risk that uh people who look at a car

like the seven seat model

y say why would I buy the model X as a

7even seat if I can get the model y as a

7even seat and you cannibalize a little

bit of those higher margin sales from

the

X's now I want to be clear this is just

I guess I'm allowed to say this because

it's not a financial thing this isn't

personalized Financial advice this is

just like advice as a friend do not buy

a seven seat

Tesla please don't do it I bought a s

seat model X and I regret it I wish I

bought the six seat with the captain's

chairs so nice six

functional seven

not do also know though your trunk space

when you get that third row goes to like

nothing to the to the point where in

2018 we went to a Dodgers game and we

used the seven seat model X the poor

people in the back were sitting in there

like with with their knees up like this

uh and well one person was because

they're a little taller and the other

person had their knees sort of at an

angle up but they also had to have this

uh beer cooler

uh on their lap because we couldn't fit

it on the in the trunk anymore because

the trunk space you know was was so

narrow I mean so you also can't fit a

stroller right so it it's not these

aren't really like functional large

family cars I wish they would introduce

a new model and and I'm a big fan of

Teslas I still maintain the model Y is

the best bang for your buck it's it's a

great vehicle the three is great as well

I don't think the difference between the

S and the three is really worth it but

anyway you know the the extra horsepower

that's really where a lot of the margin

comes from for Tesla I mean good for

Tesla if you want to support the stock

but I don't know how much one car buy is

going to make a difference relative to

your

pocketbook that's said we need to talk

about open Ai and could this open AI

Panic or or situation between you know

Elon Musk Sam Alman off or is this a

game of 4D chess or is this actually

potentially something worse we've got to

talk about that and we're going to uh

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all right so open aai Elon Musk has made

an offer to buy the uh nonprofit parent

company that owns the assets for open AI

quick primer on this you have entity a

nonprofit entity B

for-profit entity a has the assets

entity B is the for-profit corporation

that Sam Alman wants to buy open AI

with Sam Alman wants to buy the

nonprofit out and the assets at the

nonprofit for as little as possible that

way he could take it over at the

for-profit side take a 7% stake and be a

21

billionaire all

right Elon Musk hates Sam Alman they're

in lawsuits together they had a breakup

in 2018 they started open AI together

but had a breakup um and uh Elon Musk is

trying to make it harder for Sam Alman

to buy the assets from that nonprofit by

raising the bid on that nonprofit now

the director of the board of the

nonprofit just came out and said you

know I haven't I haven't gotten an offer

I haven't seen anything other than what

I've seen in the media about Elon Musk

trying to make an offer to buy us

whatever there's going to be all this

bull crap you know I just tired of all

like the drama and all this kind of

stuff I just want to give it to you

straight all right there are three

obviously you know Sam Alman rejected

the offer but I'm going to give you why

this is happening uh Elon Musk offered

97.4 billion Sam Alman responded with

9.7 billion Elon mus called him a

swindler whatever this is all just like

Twitter drama that's distracting it

doesn't matter so there are really a few

ways to look at this three options I

call it number one Elon Musk hates Sam

Alman so much and does not want Sam

ultman to be in charge of advanced

artificial intelligence or the funds

that potentially come with owning 7% s a

nonprofit that would give him an

opportunity to have control in advanced

AI even somewhere else and that Elon is

doing this for Humanity because he's

trying to protect Humanity from the

dangers of Sam Alman that is option

number one option number two Elon is

just a bitter child uh who is upset that

chat GPT is a better product than

grock I'm just saying these as options

I'm not saying that's my opinion so

please don't get mad at me you might

think that grock is a lot better I'm

just saying okay these are just options

here okay so one is Elon just hates the

guy and and is doing this for Humanity

uh number two Elon is bitter that ulate

has a better product and Elon actually

wants the better product so Elon can

have control of the better product Wall

Street Journal reports that if Elon got

control of open AI he would merge it

with xai which then makes you wonder

like bro you just bought like 100,000

h100 Nvidia chips to compete with open

AI why do you need to buy them if your

product is better

option number three maybe Elon Musk

wants the $500 billion Stargate

investment over the next 5 years and

this is just a backd door way for him to

raise some more money which then leads

back to Tesla stock where people go crap

if Elon needs money to raise as part of

his Consortium is there a risk that he's

potentially going to sell Tesla stock

again remember he told us after he

dumped the stock 24 25 billion do worth

in 2022 which is terrible led to you

know

solid decline in the stock valuation for

a while there constant selling uh you

know he promised he wouldn't sell in

2023 that he might sell in 2024 he

didn't so far he hasn't sold in 2025 So

In fairness he's he's you know beat

expectations there possibly because uh X

is maybe now ebit profitable which is

fantastic it's a wonderful thing I mean

congratulations to X they've really

carved it out over there and they've

really designed the algorithm to be

quite addicting I have actually had to

uninstall X from my phone uh because it

it just like it's turned into this

like uh Tik Tok Instagram phenomenon

where you can just kind of scroll

forever except you justify it as oh well

you know I occasionally see something

news related so I could justify it as as

I'm not wasting my time like on

Instagram or or uh Tik Tok but the flip

side is Instagram or Tik Tok make you

laugh every so

often Twitter X just makes you depressed

it's a cesspool of

negativity and I think it's really bad

for people's mental health so for me you

know I'll just speak for myself here I

have had to uninstall it I'll still go

on it occasionally on the internet but I

am preferring what I what I I talked to

course members about this yesterday and

we've got a new schedule coming out

tomorrow which would be really cool but

um I have notifications on now on my

phone uh for Discord so like I can I can

look at my phone uh and uh I could look

at my uh what's it called you you sort

of scroll down and you get the summary

notifications uh come on summary

notifications there we go summary

notifications uh and and I could see uh

your comments right here uh yeah I've

got a bunch of them just in the last

hour here I've got like six or seven of

them uh oh I got to turn off reacted

emojis though uh because then that way I

I I don't get all the Emoji reactions

but I can actually see what you're

saying but uh anyway I'm going through

this as opposed to my Twitter so like

you're becoming the course members are

now my new Twitter and it's great

because I love seeing your comments and

I think you're all level-headed

reasonable people even those of you who

aren't course members I think if you

watch this channel you watch it because

you're looking for a reasoned

perspective I don't think I'm I'm ever

going to be I I just can't do it you

know Allin YOLO one-sided it's just not

me so um this this this drama about open

AI though is putting some unfortunately

negative weight on Tesla I believe

because it does send that potential

signal of that would Elon maybe have to

sell any stock right so now you've

got uh the downside of the model uh you

know new model release you've got uh

Insider selling and you've got the open

AI pressure so those are three problems

already what's a fourth problem well

fourth problem is full self-driving

Tesla stock has basically been priced in

such a way with valuation that's quite

High We we'll pull the new valuation

right now but it it's been priced in

such a way that

they're going to be the only company

that has full self-driving cars and we

know with a fact that that is already

untrue because and I'm not pitching weo

here but I'm just saying weo is already

a full self-driving vehicle that is

functioning and giving people taxi rides

they are already ahead of Tesla not

sense now I'm not Shilling for weo

because they're obviously geog gated you

know geofence uh and and uh we don't

have the universal full self-driving of

a vision based technology that doesn't

use lar so a lower cost Mass producer

able welf driving robotaxi technology

that you know is expected to launch as

late as July August of this year in

Austin and then quickly in other states

blah blah blah like this is all

wonderful but all of that upside came

over the last you know four months in

Tesla stock but now you start hearing

these Partnerships with uh you know Uber

uh and mobile ey uh or was it lift and

mobile ey I can't remember I think it

was actually lift and it was LIF and

mobile ey uh about them wanting to

launch Robo taxi services now all of a

sudden you start looking and go oh I

didn't know I have to actually price in

competition here so you know mobile ey

was up like 133% yesterday you know we

were talking with course members about

this idea of maybe you need a full

self-driving portfolio or Tesla is just

sort of one of the eggs in that basket

and then you can incorporate other

companies like the lyts and the Ubers

and the Mobil eyes and and maybe even

the Nvidia given that you know they do

have the Nvidia Orin platform Orin and

Thor platform the drive platform uh for

essentially creating uh an FSD product

for any manufacturer Vehicles now you

know Elon has been teasing this idea of

FSD licensing with other car companies

but I just want to put that to bed

really quickly it ain't going to happen

uh first of all it's been pitched since

the beginning of 2023 second of all Elon

told us in an earnings call it would

take about 5 years for from licensing

agreement signed to in vehicle like

design it integrate it test it whatever

take about 5 years

that's slow so uh but the problem is now

with elon's

politics I don't think any brand wants

that Association because it's just going

to come with a negative downside of an

association with Elon at this point uh

and oh I want to hit the valuation of

Tesla too but I want to be

clear elon's while I do the valuation

here elon's politics unfortunately

are starting to hurt more than they have

in the past this idea of just supporting

Trump was one thing okay you donated to

Trump fine a lot of people donated to

Trump that doesn't you know if you're a

Democrat that doesn't make you that

shouldn't make you think of that person

as a bad person it's like okay they had

a preference and they supported their

candidate that's fine but now what you

have

is an active role inside of an

Administration as an unpaid employee of

the

administration and usually your Peak

popularity as a president is the day

you're elected and it's straight down

from there so there's really like you

just can't make everyone happy in

politics no matter how Noble of a cause

you're doing like cutting fraud and

waste big everybody should be a big fan

of that I'm not saying everything

deserves to be cut like research funding

at institutions uh like like colleges or

whatever and there there are debates

about what should be kept and not you

know I I personally have some concerns

concerns about the gutting of the

Consumer Financial Protection Bureau

mostly because my entire career was

founded on quality real estate loans

ability to repay truth and lending the

good faith estimate like I went through

all of that right that transition after

2008 and so like it gives me

uh like kind of shakes me to the core a

little bit that we could potentially go

back to lending like we saw in

2008 uh well leading up to 2008 I don't

I I haven't put my full thoughts

together on all that yet but that's

honestly a topic for a real estate video

but anyway that kind of stuff is is just

going to take some people and you make

them not like Elon and then therefore

they just won't buy Teslas uh be worse

than it's ever been in the past Tesla

right now is trading for a 115 PE ratio

we're expecting EPS to grow at a clip of

23 expecting it to grow at

139% over the next um four years on

average or in total divided by four puts

you at about a 35 on a PE Ratio or um uh

earnings growth ratio and if I divide

the PE Ratio 115 by earnings growth at

35 trading at a 3.2

Peg it's less Rich than it was in the

400s great but it's still not where I

love it I love it at a

1.6 okay so uh we could reverse this

right if I go 1.67 * 35

Time end of the year EPS 291 this is my

reverse valuation math

170 buy it up baby buy it up I'm not

saying we're going there can we go there

of course am I shorting the stock

now

um it could it could go up 20% tomorrow

on Elon announcing a new product you

know it was just saying like where the

valuation at current earnings is

delicious to me is like 170 now could I

be convinced to say because of FSD and

robots that we could go for a 2.67 Peg

and I'd be willing to pay a

271 yeah sure in fact I think if you get

down to the 295 line there's a case for

buying it there's a case for nibbling it

right like I I've made this my thesis is

I I'll go like this is not personalized

Financial advice generic

thesis at 330 you buy three or 4%

at 295 you go to five or

6% at

240 you go to

78% at uh you know 170 you're like 12%

you see what I mean so like and and

honestly if you get down to like you

know 100 that's when you want to be like

you know 15% unless the company's going

bankrupt which I don't think it will be

uh that's when you want to that's

probably that would be the definition of

like the rock bottom of Elon is priced

in

and and you know that's where you just

you really just max your like your

allocation to it in in a reasonable and

Safe Way my

take because then you're below the 167

right then you start trading like end

phase uh which you know they're trading

for under a onepeg that whenever rates

come down will do very very well uh we

don't know when that's going to be you

know Tesla would also benefit by the way

from rates coming down but so far unless

Donald Trump's you know Cuts create a

recession which they

H you know you're not going to get a

rapid reduction in in rates here anytime

soon that's also a topic for a different

video but you know remember the

government makes up like 40% of GDP so

even though it might seem like

entertaining to say oh look at all these

things that are getting cut all those

things that are in Cut think of them

like negative stimulus

checks remember what stimulus did to the

economy so now think negative stimulus

checks uh yeah

so uh in case you're wondering why Tesla

stock is falling there you go if you

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congratulations man you have done so

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