Firm flags risks in Tesla’s $1.5 trillion valuation

An investor analysis, published by an account on X attributed to Macfarlane Investors LLC, has argued that Tesla is significantly overvalued relative to its underlying business performance

The analysis claimed that Tesla trades at 376x earnings with a market capitalisation of around $1.5 trillion, suggesting that the stock is priced for near-perfect execution across multiple emerging business lines.

“Tesla trades at 376x earnings. $1.5 trillion market cap. Priced as though it has already won autonomous driving, humanoid robotics, and energy storage simultaneously,” the post stated.

According to the firm, the core automotive business is deteriorating, with earnings per share falling by 75 per cent since 2023 and revenue declining for the first time since the company’s initial public offering.

It added that global market share has weakened sharply, with US electric vehicle share dropping from 79 per cent in 2020 to 46 per cent in 2025, while European share fell from 18 per cent in 2023 to about 9 per cent in 2025.

In China, the analysis said domestic sales declined by 45 per cent year-on-year in January 2026, with the Model Y dropping from the top-selling electric SUV to 20th place within a month.

The report also highlighted intensifying competition from companies such as BYD and Xiaomi, noting that BYD now sells over 600,000 more vehicles annually.

A significant portion of the critique focused on Tesla’s robotaxi ambitions, which the firm argued remain limited in scale.

“The functional unsupervised fleet on any given day appears to be one to two vehicles,” the analysis stated, referring to operations in Austin.

It further claimed that most vehicles in the Bay Area operate with human drivers, meaning they do not meet the definition of fully autonomous robotaxis.

The analysis raised concerns about safety performance and transparency, stating that Tesla reports a crash rate of one incident per 57,000 miles with a safety monitor present.

It contrasted this with data from Waymo, which it said averages one incident per 98,000 miles without human backup.

“Tesla is the only autonomous vehicle company in the NHTSA database that fully redacts every crash narrative,” the post claimed.

The firm also warned of regulatory challenges, noting that key permits in Texas will only become available on May 28, 2026, while approval processes differ across cities and jurisdictions.

It argued that revenue from robotaxi operations is unlikely to materialise at scale before 2029 to 2031, compared with broader market expectations of 2027 to 2028.

The analysis further highlighted significant capital expenditure plans, stating that Tesla expects to spend more than $20 billion in 2026, potentially resulting in negative free cash flow.

“The Street is not wrong that robotaxis could eventually be a massive business. The Street is wrong about when, and at 376x earnings, when is everything,” the firm said.

Finally, the report concluded that a large portion of Tesla’s valuation reflects expectations for unproven technologies, including robotaxis and robotics.

“The thesis is not that Tesla fails. The thesis is that at 376x earnings, the stock prices near-certain execution across multiple unproven business lines, and the evidence says execution is falling dramatically short,” the analysis stated.