Despite the overvalued nature of the stock based on its price-to-earnings metric, Tesla Inc. TSLA’s CEO, Elon Musk, has defended the company’s growth, citing its stock prices, shrugging off the fundamental worries surrounding the carmaker as highlighted by experts.
What Happened: During the Qatar Economic Forum on Monday, Musk highlighted that Tesla’s share price was the measure of its business’s success.
“You can just look at the stock price if you want the best inside information,” he said as per a Yahoo Finance report.
“The stock market analysts have that, and a stock wouldn’t be trading near all-time highs if it was not, if things weren’t in good shape. They’re fine, don’t worry about it.”
According to Benzinga Pro, Tesla shares are trading at a price nearly 158.730 times its 2026 earnings. At the same time, the average forward price-to-earnings of its peers stood at 25.75 times, implying that Tesla was 6.16 times more expensive than its industry’s average.
However, Gordon Johnson, the CEO and founder of GLJ Research, countered Musk’s statement with examples. In an X post, he highlighted that “If: high stock price = good underlying business fundamentals, then WorldComm + HealthSouth + Enron + Tyco + etc. would never have gone bankrupt.”
He explained that the stock prices were simply a reflection of a stock’s demand, which could be influenced by factors like CEO comments and pump-and-dump Wall Street analysts.
Taking a dig at the Federal Reserve and Treasury Secretary Scott Bessent, Johnson further stated that the Fed’s purchase of Treasuries by printing money was also a reason for the artificially created demand for stocks.
“Were the Federal Reserve to immediately pull out all the money it printed into existence from COVID, we’d QUICKLY have REAL price discovery in stocks,” he warned.
