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Tesla's stock price is divorced from reality and it makes no sense to bet against it, but rather to ignore it
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In martial arts, in war, in politics… in life overall there’s a shared concept about hitting your opponent in their center of gravity. This is, where it hurts most . In organizations, groups, movement…
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In martial arts, in war, in politics… in life overall there’s a shared concept about hitting your opponent in their center of gravity. This is, where it hurts most. In organizations, groups, movements this center of gravity doesn’t even need to be part of the organization itself. For example, say one guy intends to drive a movement to ban bubble-gum, which is not unheard of. At first, no one really wants to ban it, it wouldn’t stand on its own and at first glance it sounds stupid. Now say that the same guy is really rich and can afford to pay marketing people to think creatively around how to spin bubble gum as being bad for your jaw, how it’s uncool all of a sudden, how it causes you to be gassy, how bubble-gum consuming societies end up littering a lot more… He can afford to do it and, with time, it may definitely stick (no pun intended), even without so much government support as when Singapore did it.
Now, say we remove the driver behind the scenes, as well as the financing he’s bringing in place to keep the movement alive. Most people’s natural inclination is to assume that “bubble gum being dangerous” is a hyperbole and there's other important things to pay attention to, which other interest groups would surely step in to cover. The movement would die. That is the center of gravity of the movement, the one guy financing it, without even needing to be part of it or show his face.
Now why do I bring this up? And how is it related to Tesla?
Although I got derailed a bit with the intro, the point I’m trying to make is that a center of gravity doesn’t need to be a visible part of an organization for it to sustain that organization. And when you short a company, very often we focus on the company itself, or members of it such as the CEO, but not on whose interest is it for the company to succeed or stay at a certain price. Similarly, most Due Diligence (DD) exercises I see done on companies almost exclusively talk about factors internal to the company without talking about WHO is pushing the price up and who is interested in keeping it up, or at least, who is holding those stocks what mental model they have.
Let’s look at, for example, Tesla. In my experience, Tesla investors tend to be tech/finance/business employees at large companies with a very high tolerance to risk trained through multiple years of “buying the dip, Elon is god, diamond hands, to the moon…”. The company key numbers keep going down and it's practically irrelevant to the average Tesla investor for a reason many shorts don’t seem to capture correctly:
Tesla investors just don’t care about financial numbers, cars shipped, features, Robotaxis, revenue, earnings, robots now… Nothing of the sorts. And when investors don’t care but shorts do, it’s shorts that find out what really drives the stock price.
Tesla Investors, especially the most sophisticated ones, understand that it’s a speculative stock. That fundamentals do not matter, the stock will go up because current investors really believe in it and there’s many future ones to come as well. It’s not tied to company performance at all, but rather to the “just buy the dip” approach that has worked so well for these investors in the past.
I thought that Tesla was way overpriced back in 2017. Honestly, the reasons I had for it continue being valid, if not more so now: Waymo is crushing it with their self-driving cars, Mercedes’s FSD seems superior and other carmakers are catching up, car quality continues to suck, charging stations are not that profitable… and yet stock price is up 20x since then.
Even in 2025, after Elon did his best to kill his public reputation with his customer base, after numbers have been going down for two quarters on a row, the stock continues to hit nearly times high:
Tesla, the company, is increasingly divorced from Tesla the stock and more of a speculative bubble, like crypto, whose holders keep having access to large amount of funds, poor financial education and conditioned to buy-the-dip for close to 10 years now . Tesla, the stock, is becoming divorced from Elon Musk as well, as 2024 and 2025 showed. He's been dancing on stage for Trump, then trading insults with Trump, babbling incoherently in interviews and, overall, doing a fool of himself while displaying his lack of understanding of tech & science to the world for several years now since the mask fell off (the pedo incident with the diver in Thailand?) and yet stock has been up ever since. Honestly, I’m not even convinced his retirement would bring the stock down. And that’s because the center of gravity of that stock is neither the company nor Elon anymore. It’s just its investors, naturally selected through the years and trained to “buy the dip” at any chance because it will always eventually go up again, just buy the dip bro. As long as they have money, the stock will go up.
And many of Tesla’s investors are investors in Nvidia and Palantir as well. It’s pretty much the same profile, high earning tech employees with more money than they know what to do with and little understanding of what these companies do, besides knowing that “buying the dip always works, just diamond hands” and reciting Warren Buffet quotes about being greedy when others are fearful (SO BUY THE DIP).
In conclusion, be aware that when you bet against Tesla (or Palantir) you’re not necessarily betting against these companies but rather you’re betting that stock owners of these companies will sell or stop buying and demand will crash. And seeing that financial results are practically irrelevant for them, you’re betting against randomness, hoping for them to focus their investments on something else OR for them to run out of cash.
To quote Graham (ironic, I know):
In the short run, the market is a voting machine but in the long run, it is a weighing machine.
Short run may last a lot longer than you think and it may last long enough for the company to end up too big to fail. But it is a voting situation nonetheless and you’re voting against a stock with an army of investors trained through years to buy the dip over and over again and not even look at stock fundamentals or even have a target exit in mind. They don’t know what Tesla is worth, how does it really make its money or anything fundamental really. Just that the stock will be worth more tomorrow for some reasons (Self driving, RoboTaxies, Batteries, Investment in SpaceX…).
This is not an endorsement of the stock either, I wouldn’t touch it with a longpole as I definitely don’t want to be the biggest fool.
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s most. In organizations, groups, movements this center of gravity doesn’t even need to be part of the organization itself. For example, say one guy intends to drive a movement to ban bubble-gum, which is not unheard of. At first, no
re’s a shared concept about hitting your opponent in their center of gravity. This is, where it hurts most. In organizations, groups, movements this center of gravity doesn’t even need to be part of the organization itself. For example, say one guy intends to drive a movement to ban bubble-gum, which is not unheard of. At first, no one really wants to ban it, it wouldn’t stand on its own and at first glance it sounds stupid. Now say that the same guy is really rich and can afford to pay marketing people to think creatively around how to spin bubble gum as being bad for your jaw, how it’s uncool all of a sudden, how it causes you to be gassy, how bubble-gum consuming societies end up littering a lot more… He can afford to do it and, with time, it may definitely stick (no pun intended), even without so much government support as when Singapore did it. Now, say we remove the driver behind the scenes, as well as the financing he’s bringing in place to keep the m
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