What Is The True Value?
Updated: May 5
Introduction:
I will assume that most of us have Tesla shares, whether bought directly into our investment accounts or indirectly, via funds that are managed by asset managers – in our pension funds etc. Hence, it would come as no surprised that the increase in the price of the shares, that had begun dropping in early Q2 2025, but recovered in Q4 2025 – was welcomed by many who held the stock.
E.g. In April 2025 Tesla was at less than $250 per share, but then recovered in October 2025 to about $450 per share – which was about the same price that it was a year ago in January 2025. (It was at $427 on 21st January 2026).
Questions:
However, questions have arisen about how & why the share price is valued at what it is today, (in January 2026) – largely because Tesla's car sales have fallen rather sharply by 11% overall year-on-year from 2024.
Tesla UK’s new car registrations dropped by more than 29% in December 2006 compared to December 2025, with overall UK sales falling 8.9% year-on-year, despite new car registration in the UK going up by 3.5% to 2 million. People were buying new cars, just not Tesla Electric Vehicles (EV).
This new car registrations trend was seen in other European nations in December 2025, where there was a recorded 48% drop in Germany and 27% drop in the Netherlands, compared to the same month in 2024.
The drop in Tesla sales has been attributed to competition from other electric car makers such as BYD and other factors – such as a dislike of Elon Musk’s political opinions & endeavours, including his management of the Trump administration’s DOGE programme. However, it was not all bad news for Tesla, as year-on-year sales grew in Ireland and Norway.
Per The Guardian Newspaper in December 2025:
‘Tesla’s market value is more than $1.5tn, more than all the other western carmakers combined, although much of that valuation is thought to stem from investors’ backing for Musk’s vision of robotics and AI rather than the fundamentals of its' EV car business’.
The Guardian essentially confirms the belief which many hold, that despite falling car sales – the rise in Tesla's share price, is because it's being valued for what it could be in a few years' time, rather than what it is now; and also due to Tesla being a popular stock.
Additionally, I believe that it may have a similar effect to some luxury goods, where it is demanded by some, simply because people like it, irrespective of the performance. It is simply desired & favoured by many – and it is not really about facts, figures & analytics – but its’ value is held highly, in a similar way to that of a painting that has been deemed to be worth $ millions.
Comparison:
Under normal circumstances and market conditions, a fall in sales within a company, results in a drop in the share price and market capitalisation – e.g. Target Corp, where a fall in year-on-year sales contributed to a 35% drop in its’ share price, as of November 2025. The slumping sales was attributed to consumers changing what they spend their money on and a backlash on Target’s company policy to roll-back DEI initiatives.
In August 2025, the then CEO Brain Cornell announced that he would step down after 11 years at the realm, to be replaced by the COO Michael Fiddelke in February 2026. The announcement happened on the same day as Target’s Q2 2025 earnings figures were released, where sales had fallen by 1.9% to $25.2 billion, with operating income at 19.4% lower than the previous year at $1.3 billion.
Despite the news about a change in CEO, Target’s share price still slumped to $88 per share in September 2025, (a month after Cornell’s announcement) – as the market was unmoved, due to falling sales. However, the stock price has recovered somewhat to over $100 per share in January 2026, although Target’s share price is currently still about 23% below what it was in January 2025, with its’ January 2026 market capitalisation at $48 billion.
Conclusion:
Time will tell if those concerns about the value of the Tesla share price are correct, given its’ falling sales. I for one think that the unease about price vs sales is needed & would encourage questions to continue to be asked – as a majority of Tesla’s revenue (reportedly around 80%) currently comes from its’ EV car sales.
Things however, may change as Tesla continues to diversify, but the last thing we’d want to have, will be an untrue & incorrect image of a company, as well as its’ true market cap value – (like with Enron), especially as most hold the stock in their investment portfolios and pension funds.
Also, as a general rule: It is important for an investor to understand how and why a company is worth what it is, regardless of the fame and popularity (or not) of the CEO or company brand. It is imperative to understand what impacts the value of any investment made - including the sales, revenue and operating costs.
Sources:
Tesla:
Target:
Company Stock Price Charts:
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Nasdaq
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