Tesla shares are running at hugely bloated values. Tesla is the Electrical Vehicle (EV) company owned by Elon Musk, who also has SpaceX and X (Twitter) in his portfolio. Musk is one of the richest people in world history, whose net worth is valued at US$436 billion as of January 2025, according to the Bloomberg Billionaires Index, and $426 billion according to Forbes, which he has gained through his shares in the above companies. He outguns the next richest capitalist, Jeff Bezos who owns Amazon, by hundreds of billions of dollars. After Bezos, Mark Zuckerberg of Meta and Larry Ellison of Oracle are worth hundreds of billions of dollars. They, and five other American magnates and the Frenchman Bernard Arnault, are the richest people in the world.
They have, between them, trousered hundreds of billion dollars in six weeks, following Trump’s re-election. There never have been individuals so wealthy.
Their huge rise in wealth is fuelled by speculation, okay, let’s speak plainly, by gambling on the stock market. This is as they slaver over the prospects of a Trump United States, with huge cuts to social programmes, massive tax cuts for the rich, and deregulation. This is exactly the scenario they have dreamed of.
Of all the companies owned by these oligarchs, Tesla has gained the most, with SpaceX in second place. In just two days Musk pocketed $24billion!
But at the same time, the charlatanism of Musk can be seen in the reality of the situation at Tesla. If we were spinning around the world in a satellite, we would be able to see the parks where Tesla EV vehicles stand, quite clearly. There are 50,000 of these unsold vehicles. All of Tesla’s holding facilities are filled to overflowing.
Tesla built 433,371 vehicles in the first quarter of 2024 but only sold 386,810. In fact, the market for electrical vehicles is slowing considerably.
Musk is a master of hype and of boastful schemes that have never come to fruition, like his predictions of putting mice on Mars, robot taxis, getting a Tesla vehicle to drive itself from one coast of America to the other, etc, etc.
Despite being an enthusiastic advocate of a totally free market, with no State intervention, Tesla was funded by the State funding, under Obama and then Biden, through tax breaks, grants, low interest loans and regulatory credits to the tune of several billion dollars. During the Covid pandemic in 2020, Tesla received substantial funding from the federal government. This was whilst Musk frothed at the mouth on social media about the funding of ordinary people by the same federal government during the same pandemic.
Some of the more sober financial pundits realise that this overheated Tesla situation cannot last and are wary of investing. One remarked, “Many will wake up to the realisation that Tesla’s rise in the past semester lacks any fundamental basis and it’s all snake oil salesmanship about nothing new and nothing justifying the current valuation.” https://medium.com/@creatix/when-will-the-tesla-bubble-burst-1835383dd7f5
Of course, the Tesla bubble is not the only bubble being touted on financial markets. There is the cryptocurrency bubble (Musk himself bigs up cryptocurrency and indeed Tesla has acquired billions of Bitcoins). There is the Meta bubble (Facebook, WhatsApp, Instagram, etc.) There is the bubble of NVIDIA (Artificial Intelligence Computing).
As we said earlier on, the Covid crisis resulted in governments and central banks pumping trillions into the stock markets in 2020. Over the last period, the rich have moved from investing in production and infrastructure, to gambling on the stock markets. This finance capital creates bubbles where the price of a commodity can soar far above its real value. These bubbles then have a tendency to burst. Unfortunately, it is the working class that suffers most from these bubble bursts and big economic crashes take place, bringing on further austerity measures. Indeed, before these crashes, bubbles can cause suffering. Take the housing bubble, where ordinary working people are priced out.
The speculation frenzy has reached a fevered pitch. The Dow Jones Industrial Average has increased by more than 700% ( from 6,381 to over 45,00). The Nasdaq has risen by more than 1,100 per cent! (From 1,300 to more than 20,000). Alongside this, speculative assets have soared in price. This includes cryptocurrency, where a Bitcoin was valued at $100,000 for the first time.
At the end of 2024, Ruchir Shama of Rockefeller Capital Management warned in an article entitled Mother of All Bubbles in the Financial Times (https://www.ft.com/content/49cca8d7-7b6e-47e3-a50c-9557d7c85fc0))
that “This is not a bubble in US markets, it’s mania in global markets.” He went on to say “Talk of bubbles in tech or AI, or in investment strategies focused on growth and momentum, obscures the mother of all bubbles in US markets. Thoroughly dominating the mind space of global investors, America is over-owned, overvalued and overhyped to a degree never seen before. As with all bubbles, it is hard to know when this one will deflate, or what will trigger its decline.” In a further article, How ‘the mother of all bubbles’ will pop, he stated, “In the late stages of a bubble, prices typically go parabolic, and over the past six months US stock prices have outgained others by the widest margin for any comparable period in at least a quarter century. When flying in such thin air, it doesn’t take much to stall the engines. All the classic signs of extreme prices, valuations and sentiment suggest the end is near.”
When that happens, a great depression will loom. This will bring the human race into great danger, as previous great depressions have led to mass unemployment, the rise of fascism and war. But at the same time the possibilities of revolutionary change will open up.
In a second article, we will examine the alignment and integration of the super-rich, among whom are the techno-oligarchs like Musk and Bezos, with the State, which may present a new stage in the development of capitalism.
Photo: Alexander-93, wikimedia commons.