Name: Tesla Stock is IMPLODING - Elon Musk goes into Full Panic
Uploaded: 2025-08-15T17:49:40.000Z
Duration: 19 min 3 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

Tesla has been one of the worst performing stocks in the last 6 months.

In fact, it has probably been the worst performing stock, and it's doing so bad that it seems like by the end of the year, the price of Tesla stock is going to be zero.

And that raises a lot of questions for Tesla investors.

How exactly did it lost over 50% of its value in just 6 months?

I don't think there is a single stock in the market that has been hit as much as Tesla.

On the other hand, it's supposed to be the other way around because Elon Musk right now is one of the most powerful people on the planet, he is the closest person to president Trump and people expected that when he is going to become president Trump, Elon Musk's Tesla is going to soar and will worth not just 1 trillion dollars but 2, 3, it will become the most valuable company on the planet earth.

But something went wrong, so let's try to find out what exactly has happened in this video and also figure out what is next for Tesla stock.

If you are ready, give this video a thumbs up and let's dive right into it.

Just by looking at the graph, you can clearly see that it has been a complete rollercoaster.

Back at the peak, it has reached almost 500 dollars per stock, but right now it is being traded around 224 dollars.

The first thing that we have to do in order to find out what is happening with Tesla is to find out its true valuation.

If we understand the true valuation of the company, then we can figure out what exactly the stock is headed to.

Now we cannot go into every single metric, but we are going to take only one basic metric to find out if the stock is overvalued or undervalued, and that will help us to determine where the stock is headed to, that will help us to figure out whether the stock is going to rise or it's going to fall or maybe it is fairly valued at the price that it is currently being traded.

Now one of the basic metrics is of course PE ratio, and a lot of people have probably heard about that.

A PE ratio is a very simple metric where how much investors are willing to pay for every dollar that a company is earning.

So if the PE ratio is for example 25, then investors are paying 25 dollars for every dollar that a company earns.

That leads a lot of people to wonder, why am I overpaying by 25 times for every dollar that the company is making.

And the logic behind it is that this company in the foreseeable future is going to grow much bigger and will make much more money, therefore the dollar that the company is earning is worth far more than the dollar that I have in my pocket.

And we have different kind of ranges for different kind of industries, when it comes for example to auto companies, then we have a PE ratio of 5 to 10, maybe 15 in the best case scenario.

When it comes to technology, it's something between 15 to 30.

Now the question is that, what is the PE ratio of Tesla?

And that means that investors are overpaying 110 dollars for every dollar that Tesla is earning.

And that is after the crash that Tesla has experienced.

It's not that Tesla is at it's peak, if you go to it's peak, probably the PE ratio was something like 900 to a dollar or 1000 to a dollar, that was insane.

Anybody with basic understanding of investing and finance would tell you that, that was an extremely overvalued stock.

But that's not the only thing that we want to pay attention to, what we want to find out that, if we actually give it a proper PE ratio to Tesla, what could be it's real price today.

Now in order to find that out, we have to first of all take the PE ratio and we have to multiply it by the EPS.

Now and that will give us the price of the stock.

Now EPS is earnings per share, we are going to take the total earnings of the company and we will divide it by the number of outstanding shares and that is going to be our EPS.

If we take our PE ratio and we will multiply it by the EPS, we will get the current stock price.

Earnings per share is 2 dollars and 4 cents, I have the graph right over here, you can literally check the earnings per share for Tesla for it's entire history.

So if we are taking 2 dollars of EPS and we will multiply it by the current PE ratio, we are getting 224 dollars and that is pretty much the price that Tesla is being traded right now.

But now, let's do something very interesting.

Let's give Tesla a fair PE ratio as it's industry, and that is 25.

Because anything more than 25 is most likely overvalued even for a tech company unless it's a startup that has a lot of huge aspirational dreams to achieve something huge.

Exactly, that's how Tesla positions itself.

But anyways, let's take a PE ratio of 25 multiplied by the EPS that we have which is a little over 2 dollars and that will give us 51 dollars per share.

So at fair valuation, if we take just one metric, which is PE ratio in this case, Tesla shouldn't worth more than 51 dollars per stock, but the price right now is around 230 dollars or probably 235 dollars.

So if you are wondering why on earth did Tesla stock has crashed from 500 dollars to as little as 230 dollars, well, let me tell you something, it's supposed to crash much more than that, it's supposed to go to 50 dollars.

But wait a second, Tesla isn't in a position that Apple is, for example, Tesla is still in that position where it has a lot of potential to grow.

They are trying to make an argument that we are still a little company that is going to grow significantly over the years and that is why a 25 PE ratio doesn't apply to us.

So let's take something a little more than that.

If you look at the PE ratio of Nvidia, it's around 40.

And some people say that Nvidia is overvalued.

So let's take it slightly more than that and give it a PE ratio of 50.

At that PE ratio, the price of Tesla stock should be 81 dollars.

Which means that the price right now is still massively overvalued.

Do you see why people are not, why professional investors are not freaking out why Tesla stock has crashed?

So the question is that, how much Tesla should be earning in order to justify the current stock price.

If we don't want Tesla to be overvalued at all, then we will take a PE ratio of 25.

And that means that they need an EPS of 10 dollars in order to justify the current price.

Their current earnings are 2 dollars and 4 cents.

Which means that they have to grow their earnings 5 times in order to justify their price.

Right now, their earnings are a little over 7 billion dollars.

Which means that they have to be earning 35 billion dollars in order to justify the price that they have right now after it has crashed by over 50 percent.

But again, we are going to be a bit more generous with Elon Musk, we are going to be a bit more generous with Tesla investors because I think I will get bombarded with negative comments from people who have invested in Tesla.

Let me tell you something, I am also an investor in Tesla.

At PE ratio 50, the earnings per share should be something around 4.5 in order to justify the current price.

And that means that they have to double their earnings and earn at least almost 15 billion dollars.

And that leads a lot of people to ask the question, why on earth then, the Tesla stock being so overvalued, it still has grown so much to almost 500 dollars per share.

Like think about it, if the market is filled with so many smart, intelligent investors, and its very easy to find out its true valuation, well, maybe not that easy, but any great investor would know that.

Why on earth people still kept buying Tesla stock even though they knew that its overvalued stock.

In fact, if you look at the data, you will find out that there are actually hedge funds, wall street investors who poured millions, tens of millions of dollars into Tesla stock.

Why do they do that when they know that Tesla is overvalued?

And the answer to that question is, the way that Elon Musk is being paid.

Elon Musk is not getting a direct paycheck for his position to be at Tesla.

His paycheck is directly tied to the performance of Tesla.

So we have different kind of KPIs, Key Performance Indicators.

If Tesla is going to achieve certain milestone, then Elon Musk is going to get paid a certain amount of money.

Or he will be able to receive certain amount of shares because he achieved those indicators.

And one of the examples that I will give you will illustrate everything to you.

There was a 10 year plan from 2018 to 2028 and there were 12 milestone for Tesla to achieve.

If you will be able to achieve this milestone for Tesla, we are holding Tesla shares.

If Tesla capitalization is going to go to 650 million dollars or billion dollars in this case, then our shares are going to grow.

If you can take company to that milestone, if you can take company to become so huge, then you will be able to buy 101 million Tesla shares at the current price.

So if the current price is for example 10 dollars or 100 dollars and then Tesla stock goes to 500 dollars, then suddenly when he achieved that goal, Elon Musk will be able to exercise his stock option and buy Tesla shares at 100 dollars and then sell them at an open market for 500 dollars.

But because Tesla went through multiple stock splits, and a stock split is basically when you have a stock price actually going so high, then the company decides to split that stock.

So for example, if the price of the stock is reaching 1000 dollars and then the company is going to go for a stock split 2 to 1, then each stock will be divided into 2 stocks and each stock will worth 500 dollars.

Nothing fundamentally changed, but the number of stocks in the market simply has increased and that makes the stock much more liquid in the financial system or in the stock market.

So if you actually do the math for the stock splits, then the current price is going to be 15 dollars that Elon Musk should be able to buy the stocks of Tesla.

This is when you start to understand why Tesla stock has grown so much.

The motivation of Elon Musk is not to literally make a lot of money for Tesla.

The motivation for Elon Musk in order to get the company to a position where he will get his stock compensations.

Again, I am not trash talking Tesla, I am not trash talking Elon Musk, but I am simply explaining the logic behind it.

And Elon Musk understands how to grow a market capitalization better than anyone else.

Because if you look at the market, you see, when you are getting into the market, you are paying for potential future profits.

It's not about today, it's about the future.

And the future isn't always guaranteed, yes, there are investments that are pretty much guaranteed, so you can go and buy a property and invest in real estate.

But how much can you possibly get from real estate, 6 percent, 7 percent, maybe, best case scenario, you will get 10 percent, maybe slightly more than that.