👁️ Elon Musk Ran Out of Leverage
My Tesla price target based on normalizing P/E: $107.
When I was first invited to write Stealing the Future: Sam Bankman-Fried, Elite Fraud, and the Cult of Techno-Utopia, I was slightly worried that another book about SBF would be obsolete by the time it came out (October!), almost two years after his conviction.
But many, many recent events have been echoes or reiterations of the FTX fraud and its roots in techno-utopian/TESCREAL ideology. This really started in January with the Zizian Rationalist murders, which illustrated the fundamental moral bankruptcy of operationalized utilitarianism.
Elon Musk’s falling out with Donald Trump, and the now-teetering state of Musk’s empire of hype, illustrate both the dominance of leveraged bets in shaping our current reality, and the increasing volatility caused by the repeated collapses of these hope-filled bubbles.
More deeply, Musk’s arc over the past two years illustrates the kind of hyper-leveraged investing patterns that now enable people like Musk or Ripple’s Chris Larsen to gain present-day power, and which are deeply rooted in racist pseudoscience, eugenics, and white supremacy. The only premise for believing all of the incredible horseshit these people pitch to the public, after all, is that they are uniquely genetically gifted “geniuses,” and if we give them all of our money, they’ll make us rich.
Elon Musk, like most white supremacists, hilariously underperforms these beliefs about his supposed inborn gifts.
As I write this, Tesla stock is sitting at $325 a share, or just about the same as its price on October 21, 2021. It’s down about 7% from levels from November-December of 2021. And it’s down close to 30% from six months ago.
Meanwhile, from October 2021 to today, the broader Dow Jones Industrial average is up 50%. The more focused S&P 500 index is up a staggering 82%.
There’s no nice way of saying this: over the past five years, Tesla investors have been brutally screwed.
(By the way: I called this back in March:)
It’s not about to get better. Tesla’s Q1 numbers were catastrophic, and as many observers have pointed out, his falling out with Donald Trump means that his tiny new customer base of MAGA types buying Cybertrucks, the already-inadequate replacement for all the environmentalist liberals he has utterly alienated, is now gone, too. And whether or not Trump actually follows through on threats to withdraw Tesla’s subsidies, those bloated government contracts intended to prop Elon up certainly won’t survive. Symbolically, the red Tesla Trump rolled out for his White House lawn sales pitch has apparently disappeared.
How exactly did those Tesla investors get screwed? By hidden leverage justified by a variety of fraudulent misrepresentations - not much different from the way investors in FTX were duped by the secret leverage of its “borrowing” of customer funds.
One form of that leverage is through Tesla’s sky-high price-to-earnings ratio. Read on for some slightly more technical analysis, and where I get my $107 price target.
Price-to-Earnings is a Form of Leverage
This is a chart of Tesla’s Price-to-earnings ratio over the past ~five years, generated by Claude. You can access the full artifact here.
Keep reading with a 7-day free trial
Subscribe to Dark Markets to keep reading this post and get 7 days of free access to the full post archives.