Tesla: King of Meme Stocks? Putting Retail Investors at Major Risk?

Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!

---

Last Updated on: 22nd March 2025, 12:25 pm

There are meme stocks and then there are meme stocks. A key element of a meme stock is that it has a huge amount of decentralized, retail, normal-folk fans and investors. A hot social media trend is rolling, and the meme stock benefits. Another element is typically that the stock price (or, more precisely, the company’s market cap) is way out of whack from the company’s actual finances.

Let’s take a quick example of what often happens with a meme stock. Let’s look at the 5-year stock trend for AMC, the beloved movie theater chain. I love going to the movies, and I love AMC, but there’s no denying that AMC has faced a lot of challenges from the rise of streaming, the COVID-19 pandemic, and the continued rise of streaming. Somehow, however, the stock became a giant meme stock that “benefited from” a massive influx of investments in 2021. The following are two graphs that are the same — a 5-year stock price graph. I just put the marker in different places to highlight the stock price at those times.

As you can see, on March 20, 2020, the price of AMC stock closed at $14.07. Then, a year and a quarter later, the price had spiked to a high of $261.44! Wow, what a gain! At the time, a common narrative was about how the meme stock was winning and proving traditional stock market analysts and investors wrong. Dumb old white-hairs — didn’t understand how the market was evolving! AMC stock was going to win, because a giant group of obsessively online dudes was making it win.

However … the stock is now at $3.04. It looks like the stock price stayed above that initial price of $14.07 for a lot longer than many critics of the meme stock trend would have expected. I mean, even though it clearly declined from June 2021, it was still relatively high through the end of 2021, and even deep into 2023! However, in the end, the actual finances and business case for the company apparently caught up to it.

What’s all this got to do with Tesla, a company making a healthy profit quarter after quarter? The company has done very well for itself the past several years, and it sold almost 2 million cars two years in a row.

Well, Tesla’s P/E ratio is still several times higher than competitors’ (it’s almost 18 times higher than Ford’s, almost 18 times higher than BMW’s, almost 16 times higher than GM’s, about 3.65 times higher than BYD’s, and 40 times higher than Porsche’s), and it’s market cap ($779 billion) is more than $100 billion above Ford’s ($39.74 billion), GM’s ($49.55 billion), BMW’s ($54.83 billion), Volkswagen AG’s ($60.79 billion), Honda’s ($52.63 billion), Toyota’s ($299.7 billion), Hyundai’s (36.03 billion), Kia’s ($25.96 billion), Geely’s ($23.64), Xpeng’s ($20.71), and NIO’s ($9.39) combined.

Is Tesla worth more than all of those companies combined?

Notably, as you should know, Tesla sales dropped globally in 2024 compared to 2023. So far in 2025, they’ve dropped even more. Tesla robotaxis are about a decade late. BYD has passed Tesla in sales of full electric vehicles (and sells a ton of plugin hybrids as well). Most of these other automakers are seeing their EV sales rise while Tesla’s decline. The long-held narrative that Tesla’s sales would keep rising fast while legacy automakers’ sales collapsed, justifying this kind of warped market cap comparison, could be revived — but in the past year-plus, it’s completely off the mark.

Tesla’s still a massively profitable company sitting on a ton of cash, but all of the trends have been in the wrong direction.

The idea — the justification — is that Tesla is on the verge of breakthroughs in self-driving/robotaxis, robots, and AI. That’s the only justification for Tesla’s super high stock price and market cap, and Elon Musk has at least said the same thing for the past couple of years. He knows that Tesla’s auto business is not competing well enough with EV leaders in China, or even with legacy automakers in Europe and the US anymore. It’s all about another bet-the-company breakthrough.

One could be forgiven for thinking Tesla’s done it before under Musk’s leadership and will do it again. But I think we should keep in mind that the Tesla story and mission was based on some pretty solid facts before, and many EV enthusiasts could see the plan playing out. EV powertrains were simply better at their essence — more efficient, exciting instant torque, simpler — and it was just a matter of driving down battery costs over time while scaling up production and demand. As long as the core technology followed the learning curve expected, EVs would win. Tag on the strong interest worldwide in stopping global heating and supporting zero-emissions technology and you’ve got a pretty clear path forward. Yes, it’s hard to manufacture things, it’s much harder to mass manufacture things, and automobiles are especially hard to mass manufacture. It was certainly no easy task to do what Tesla did! However, the path was clear.

Now, the argument is that Tesla’s “Full Self Driving” should be able to be able to get to robotaxi capability ahead of others just with cameras and AI — no lidar, no radar, no problem. Others in the field have disagreed for years, and there are even robotaxis that have been operating for years that keep expanding their territory. But with a little more of a breakthrough, the dream is that Tesla will be able to flip a switch and turn millions of customer vehicles into robotaxis overnight. Also, despite there being a lot of competition in the robotics market, there’s a hope and a wish that Tesla is far ahead of the competition and will be able to make a multi-billion-dollar business out of its super special robots.

Maybe that’s all true. Or maybe Tesla has just turned into the king of meme stocks — supported somewhat deceivingly by its successful (but dwindling) electric car business, but with millions of investors basically betting on Tesla achieving some minor miracles in AI and robotics.

Tesla stock has been crashing in 2025 as the company’s disappointing sales numbers have come out and Elon Musk’s crazy political antics have taken center stage. However, even as there’s been a massive selloff, retail investors have piled into the stock to a notable degree. A headline yesterday from Bloomberg stated, “Tesla’s Retail Fans Buy the Stock at a Pace Never Seen Before.” Hmm…. “Tesla Inc.’s stock is in a freefall. Its sales are plunging around the world. Even its most avid Wall Street bulls are turning cautious. But one group is buying the electric-vehicle maker’s shares like never before: CEO Elon Musk’s fans,” the article starts. That sounds quite meme stock-y to me. What do you think?

“The company has long had an ardent fan base of individual investors who hang on Musk’s every word on X, the social-media platform he owns. They analyze Tesla in great detail in online forums and largely function as a hype crew for the stock.

“But their current level of enthusiasm is staggeringly high, even by recent historical standards. Individual investors have been net buyers of Tesla shares for 13 straight sessions through Thursday, pumping $8 billion into the stock, retail trading data from JPMorgan Chase’s global equity derivatives strategist Emma Wu shows. That’s the biggest inflow over any buying streak since 2015, which is as far back as the data goes.”

Wow.

Of course, this has happened while the stock has been rolling off a cliff. “What makes the retail buying notable is Tesla’s share price has sunk 17% over this time, wiping out more than $155 billion from its market value.”

Those of us who have followed the stock for years know the refrain well: “Buy the dip!!” It’s always just a dip and an opportunity to buy! The stock will rise for years to come, but then when there are significant drops that apparently make no sense, it’s just an obvious buying opportunity! “Diamond hands! Buy the dip! Don’t lose faith! The divine and immortal Elon will always win!” Clearly, many retail investors are all-in on these arguments.

As long as the company is making money, there’s nothing to worry about anyway. It’s just about waiting out the bad press. As we’ve seen even with AMC, even completely illogically believing in a company despite market dynamics and its out-of-date business model can extend for an absurdly long time. There’s still a chance Tesla sales rebound with the new Model Y and another new model. Perhaps some of the other business divisions start to make a lot of money, too. However … if Tesla sales and finances continue to go in the wrong direction, there’s a solid possibility that Tesla profits shift to Tesla losses. If that happens, what next?

If Tesla is the king of meme stocks, its reign could be cheered for years, but it could still end up seeing the fate of other meme stocks, right? The company clearly has a lot of the qualities of a meme stock. It’s been called that countless times for years for a reason. It may also be a “meme company,” and benefiting from that, but funny cat videos used to rule the internet — and then people got more interested in other things and algorithms changed. Blackberry used to rule the cell phone market. Kodak used to be the king of photography. I know, these comparisons have been used plenty of times to forecast Tesla’s future compared to legacy automakers’. But what if Tesla is more of a Blackberry than an Apple? What if it is indeed being passed up by faster innovating, more smartly managed competitors?

What if the biggest reason for its enormous market cap has always just been that it’s the most magnificent meme stock in history?

Side note: We’ve also now got a trump appointee, U.S. Commerce Secretary Howard Lutnick, telling people “Buy Tesla” (an illegal promotion of a private company by a federal employee, of course) and claiming “It will never be this cheap.” Well, when have Trump World associates ever been known to commit crimes, commit fraud, or be super wrong? It’s surely not a desperate plea to save his own butt, right?