Tesla Inc. shares have nearly doubled in value since the last time the company reported earnings— a set-up that usually spells high expectations for upcoming results. But its car-selling business has become a sideshow to Elon Musk’s political prominence.
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“The market is behaving as if Tesla’s results don’t matter, and that may catch investors flat-footed in case of a large shock,” said David Wagner, portfolio manager at Aptus Capital Advisors. “The electric car business is still about $200 billion in market value, but it is still the funding mechanism for a lot of the actual sideshows.”
The flip side is Tesla is now vulnerable to the twists and turns of a potentially volatile relationship. Musk last week openly questioned if companies that joined the Stargate artificial intelligence venture announced by Trump had the funds to follow through on promises. Trump and the Republican party are generally anti-EV, and the president has ordered his administration to consider eliminating related subsidies and policies.
The pitfalls of ascribing eye-watering valuations to future potentials — be it artificial intelligence or robotaxis — came into sharp focus Monday, when the biggest US technology stocks nosedived on fears that Chinese artificial-intelligence startup DeepSeek could disrupt the current AI business model.
“Any company is subject to disruption, but since the auto manufacturing business has a much longer cycle than computer software/hardware, I think that Tesla’s vulnerabilities will occur a bit more slowly,” said Steve Sosnick, chief strategist at Interactive Brokers. Apple Inc. has been secretly working with SpaceX and T-Mobile US Inc. to add support for the Starlink network in its latest iPhone software, providing an alternative to the company’s in-house satellite-communication service.
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