Even after the company’s stock surged 7.7% after the bell, Tesla investors aren’t showing signs of easing off.
It hasn’t come without a lot of wrangling, though, as Elon Musk’s announced promises to refocus on Tesla have not placated long-time supporters, who are questioning the company’s valuation and leadership direction.
Gary black exits, citing valuation disconnect
Longtime Tesla supporter and investment adviser Gary Black revealed this week that he has sold all his shares in the company. This marks the first time since 2021 that he holds no position in Tesla. Black said the current stock price of $358 per share no longer reflects the company’s fundamentals. He pointed to a 2025 price-to-earnings ratio of 188x, while earnings estimates have declined by 40% this year and fell 5% just last week.
Black also raised concerns about weakening vehicle deliveries, citing a 12% expected drop in the second quarter and a 10% full-year forecast decline. These figures are worse than Wall Street’s estimates of 7% and 5%, respectively. He warned that the upcoming robotaxi test in Austin presents more risk than upside. He criticized the upcoming affordable model, suggesting it is a low-cost version of the Model Y rather than a truly new vehicle.
Based on a forecast of 5.4 million vehicle deliveries by 2030 and adjusted earnings of $12 per share, Black set a 6-to-12-month price target of $310. His calculation assumes a two-times PEG ratio and a 14.2% cost of equity, far below the current market price.
Shareholders demand increased focus from Musk
A group of shareholders led by SOC Investment Group sent a letter to Tesla board chair Robyn Denholm demanding that Elon Musk commit to working at least 40 hours a week at Tesla. The investors, holding 7.9 million shares, argued that Musk’s political engagements have damaged the company’s brand and performance.
The letter pointed to a 71% drop in quarterly profit and a 13% fall in sales. It also criticized the board’s oversight, calling for a real CEO succession plan, restrictions on board commitments, and the addition of an independent board member.
Legal pressure adds to investor concerns
The board continues to face scrutiny over its close ties to Musk. In December 2024, a Delaware judge voided Musk’s $56 billion pay package due to conflicts of interest involving board members. Some of the shareholders behind the recent letter were also involved in that case and remain concerned that Musk is overcommitted and unfocused on Tesla.