About 20% of all cyber truck sales were to Space X in the last quarter with data

https://www.bloomberg.com/news/articles/2026-04-16/tesla-leans-on-elon-musk-s-spacex-to-buoy-sagging-cybertruck-sales


I suspect we'll see more nuggets as Space X files to go public

I honestly don't understand why Tesla isn't $50/share, or less.  They have lost in their edge in the EV market, dropped a few models, the robo-taxi program is stubbornly hanging on to camera only tech and the cybertruck is generally regarded as garbage.

It has a P/E Ratio of 372 while also having declining sales for two years in a row.  How does that make any sense?

Why are P/E ratios so much higher in general than they were historically?

https://www.multpl.com/s-p-500-pe-ratio/table/by-year

A stock price is a story people tell about the future. Musk has been terrific at telling these stories. But most CEOs are not. So why the high valuations? Is everyone just gambling? Is the stock market at an average P/E of 30 more less all just speculation?

I was having trouble remembering this yesterday, but one explanation I've heard is stock buy backs have inflated the indexes. The person was saying that in inflation-adjusted dollars, the DJIA had not changed year of year for decades, then suddenly inflated.

Claude does not mention this in its answer

Quote1. The Index Itself Has Changed Dramatically
Tech companies, which are historically high-P/E growth companies, now dominate far more of the index than they used to. Today they hold three of the top four positions by market cap. This has come at the cost of telecom, industrials, energy, and utilities — all traditionally lower-P/E "value" sectors. In 1951, the S&P was heavily weighted toward industrials and manufacturers — slow, steady, tangible businesses. Investors pay more (relative to earnings) for high-growth companies.

2. Corporate Profit Margins Are Much Higher
Both gross and net margins have grown since the 1990s. This reflects a shift in the index itself — higher-earning, more profitable businesses command a premium, especially in a low-rate environment. raymondjames Software, platforms, and financial services have far fewer physical costs than mid-century manufacturers, so more revenue falls to the bottom line.

3. The Shift from Tangible to Intangible Assets
In 1951, a company's value lived in its factories, machines, and inventory. Today, the most valuable companies hold intellectual property, software, brand power, and network effects — assets that scale without proportional cost increases. Investors rationally pay more for earnings that can grow without heavy reinvestment.

4. Interest Rates and the "Risk-Free" Alternative
The P/E ratio, using the Gordon Growth Model, is a function of the dividend payout ratio, the expected growth rate, and the required rate of return. Marshall & Stevens When interest rates are low (as they were through most of the 2000s–2020s), the "safe" return on bonds is low, so investors accept lower expected returns from stocks — which mathematically means paying a higher price for the same earnings. In 1951, bond yields were more competitive with stock earnings yields.

5. Lower Cost and Ease of Investing
The investment industry has changed enormously. In 1940, a P/E of 15 wasn't an amazing deal for stocks — but in the modern era it may well be, because structural changes have made investing far more accessible and efficient. Substack Index funds, zero-commission brokers, and global capital flows mean enormous amounts of money are continuously chasing stocks, supporting higher prices.

6. Greater Earnings Stability and Forecasting
A higher P/E ratio suggests that investors expect higher earnings growth in the future. Marshall & Stevens Modern companies have more diversified revenue streams, better risk management, and operate in global markets. Post-war investors in 1951 had lived through the Depression and WWII — uncertainty was extreme. Higher perceived risk = lower prices paid per dollar of earnings.

The honest debate: The primary case against simply accepting higher P/Es as normal is the idea that markets may be structurally overvalued. The case for it is that changing market composition — particularly the heavier weight on high-growth tech — has reasonably driven higher average ratios over time. Current Market Valuation
In short, today's higher P/Es reflect a mix of genuinely structural changes (better businesses, higher margins, more growth) and potentially some speculative excess. Whether 30x is "fair" depends heavily on whether you believe current earnings growth rates and interest rate assumptions will hold.

One thing neither of those cover is the advantageous tax situation stocks afford.

First, there's the capital gains tax. After Reagan's 1986 tax reform, regular income and capital gains were about the same. For a high earner now, capital gains is much lower (I think 37% vs 23%)

Second, there's the fact that passing stocks to heirs allows for a step-up in basis and the estate tax exemption.

Finally, there's the borrow until you die strategy that rich people use. Granted, there are not that many rich people, but they do account for a large amount of the stock market.

So because of the tax implications, especially when using the "borrow until you die then pass it all to heirs without tax" means that stocks look super attractive to rich people looking to create dynastic wealth.