$Tesla(TSLA.US) now trades at a forward P/E of 180x. In the history of the stock market, we can’t find a single $1T market cap company that traded at a forward P/E of 180x (we even asked Grok with no success). Why not? The long-term growth rate needed to justify a 180x P/E would cause TSLA market cap to be bigger than $Apple(AAPL.US) and $Microsoft(MSFT.US), which seems insane since both have huge TAMs, unassailable brands, and highly predictable future cash flow streams.

TSLA bulls who pretend they understand finance dismiss my argument that TSLA’s valuation looks stretched by saying the 2025 P/E is irrelevant. Rule #1 in investing is buy low, sell high. Rule #2 is price is what you pay, value is what you get. Arguing that P/E doesn’t matter to an investment decision tells me the person doing the arguing has no valuation discipline and is just buying concepts, rather than on some assessment of value vs price.

A stock’s valuation is the present value of ALL future cash flows discounted back at a risk-adjusted cost of capital, plus net cash. One can then divide that estimated value by 2025 earnings, 2026 earnings, 2030 earnings, or any future earnings to calculate a stock’s appropriate P/E. To say that P/E doesn’t matter is equivalent to saying one doesn’t take valuation into consideration when making an investment decision. That would be like buying an apartment building and saying the current rent roll, expected future rent increases, and future expenses don’t matter. Normally, an investor’s valuation of a stock gets compared to the current price. If the investor’s valuation is much higher than price, one buys the stock; if lower, one exits the stock or doesn’t hold it. At the extreme, one can short a stock if it’s a bad business and the value is significantly below price as we have done with $Lucid(LCID.US) and $Polestar Automotive UK(PSNY.US). We can’t see a situation where we would short $Tesla(TSLA.US).

P/E is a short hand metric used by portfolio managers to size relative positions. If one only owns one stock, a metric like P/E doesn’t matter. Institutional portfolis typically contain 30-100 positions. Without these shorthand metrics (P/E, P/E vs long-term eps growth (PEG), EV/Ebitda vs long-term rev growth, % upside/downside based on present value to price) how does one with multiple positions size $Tesla(TSLA.US) vs $NVIDIA(NVDA.US) vs $Meta Platforms(META.US)? We tend to use risk-adjusted upside/downside to size positions.

Next year’s TSLA WS earnings are now $1.93 per share. 2026 EPS is $2.90. 2028 EPS is $7.60. All are down 25-40% from the start of 2025 as WS marked down the future earnings power of Tesla’s EV business as FY’25 delivery estimates came down. The EV business still comprised 72% of Tesla profits in 2025/1Q. Analysts typically look at P/Es relative to the future growth rate, which tend to degrade over time as success attracts competitors who over time match a company’s technological advancements. If there’s a moat, or a patent, or a technogical advantage that can’t be copied then a 180+ P/E may be justified if equally high growth rates can be sustained.

On 2025 (1-year forward) non-GAAP eps, TSLA at Friday’s close of $347 trades at a 2025 (one year forward) P/E of 180x, a 2026 (two year forward) P/E of 120x, and 2029 (5-year forward) P/E of 45x. The 2025 and 2026 P/Es are extremely high relative to TSLA historical comparable forward P/Es. The 2029 (5-year forward) P/E is in line.

As our forecasts go out to 2029 and beyond, TSLA’s forward growth rate will degrade as Robotaxi and Optimus are included in the base. When an analyst opines about a P/E it’s usually to assess the P/E relative to the future growth rate from that point forward. So a 2025 P/E gets compared to the forward eps growth rate from 2025-on; the 2026 P/E gets compared to the eps growth rate from 2026-on, and the 2029 P/E gets measured against the growth rate from 2029-on.

Ownership	%Owned	Share Chg	Report Date
Public Investment Fund	45.38%	No Change	28/04/2026
Uber Technologies, Inc.	9.67%	24.04 M	14/04/2026
The Vanguard Group, Inc.	3.09%	No Change	31/12/2025
UBS Asset Management AG	2.43%	1.51 M	31/03/2026
BlackRock, Inc.	1.61%	208.78 K	31/03/2026
State Street Global Advisors, Inc.	0.68%	220.74 K	31/03/2026
Geode Capital Management, LLC	0.66%	46.62 K	31/03/2026
BNP Paribas Financial Markets SNC	0.5%	955.85 K	31/03/2026
Morgan Stanley	0.48%	-2.35 M	31/03/2026
Bank of America Corporation	0.43%	No Change	31/12/2025

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