Certainly! Here is the paraphrased article in the third person:
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Elon Musk is known for making bold claims, some of which materialize while others do not. Recently, he expressed confidence that Tesla could become the most valuable company globally, surpassing the combined market capitalization of the top five current companies, such as Nvidia, which together exceed $10 trillion. Presently, Tesla’s market cap is below $900 billion, suggesting that Musk envisions a potential tenfold increase in Tesla’s value. Questions arise about the validity of this claim and whether purchasing Tesla stock is advisable at this time.
### Challenges in the Automotive Sector
Tesla’s automotive business, after years of growth, has plateaued in recent quarters. In the first quarter of this year, customer deliveries decreased by 13% year-over-year to 337,000 units, amid increasing competition worldwide. Automotive revenue also dropped 20% year-over-year, a more significant decline than deliveries due to substantial price cuts. The anticipated Cybertruck has not met expectations and is not projected to generate substantial sales soon.
Profit margins have declined to 7.4% over the past year, impacting Tesla’s earnings potential. Should deliveries continue to fall alongside reduced prices, maintaining operating margins could prove challenging. While no 2025 long-term guidance has been disclosed, indicators suggest a continued decline in sales across key markets, including China, Europe, and the United States.
With no new models announced by the company, the future outlook for Tesla’s automotive division remains uncertain. While prospects exist in the form of the new Cybercab and autonomous vehicle technology, these remain speculative, with robotaxi deployment still unrealized—unlike competitor Waymo, which offers 250,000 weekly rides.
### Prospects of the Optimus Robot
Musk’s current optimism is fueled by the potential of the Tesla Optimus Robot, a humanoid robot under development. He envisions a market for generating $10 trillion in revenue by selling 100 million units at $100,000 each. However, Tesla has yet to produce a functional humanoid robot, with demonstrations involving remotely controlled models. Should production become feasible, demand for 1 million units annually seems unlikely, let alone 100 million, given the limited customer base.
Musk’s predictions may be optimistic, but they often lack grounding in economic reality.
### Investor Realizations
Tesla investors are gradually recognizing a harsh reality—the stock may have been overvalued for some time. Having traded around $300 at the beginning of 2021, it currently sits at approximately $275, possibly still overvalued. Tesla’s stock maintains a high price-to-earnings ratio of 150, while typical automotive stocks, such as Toyota Motors, fall closer to a P/E of 10. Presently, Tesla’s automotive revenue is declining at an annual rate of 20% with concerning future indicators.
Though management has high hopes for the Cybercab and Optimus Bot, these ventures are not yet established businesses. While innovation is possible, current stock prices remain high.
Even with recent downturns and Musk’s ambitious projections of a potential tenfold increase in Tesla’s market value, purchasing the stock may not be prudent. Upon closer examination, Tesla appears to be a struggling automotive business trading at an elevated P/E ratio. Caution is advised until further developments occur.
