Tesla Is the Bubble

There’s more pain ahead for still-frothy tech stocks…

Like most analysts, I track a handful of key indicators to monitor the markets. The 10-year Treasury bond. The 30-year mortgage rate. Valuation metrics on the S&P 600. And I use another indicator to track froth: electric carmaker Tesla (TSLA).

Investors piled into Tesla in 2020 and 2021, driving the stock from $84 to $1,229 at its peak last November.

This year is different. The S&P 500 has dropped 19%. The tech-heavy Nasdaq-100 has dropped 27%. And Tesla has dropped around 39%.

  • Yet Tesla is still in a bubble. From where I sit, Tesla is the bubble.

Just look at the signs. First, Tesla still has a $700 billion market cap. That makes the stock 60% larger than Facebook (META). Something is wrong there.