Nov. 3 at 3:31 AM
$TSLA can certainly see valuation compression from time & normalization: slower unit growth, thinner margins, and a less exciting narrative gradually taking momentum out of Tesla's disruptive tech story.
Price/Earnings multiples (currently around 170× forward) tend to compress toward 25× for steady-growth companies.
Even if Tesla’s EPS doubles over the next few years, a 170× → 25× multiple compression would mean the stock likely falls because the valuation premium contracts faster than earnings expand.
Lower margins = lower free cash flow yield = valuation rerating downward even with rising unit sales.
If autonomy remains Level 2/3 for years (still requiring driver supervision) and Optimus remains R&D stage, the market re-prices Tesla as much as -30-40%, regardless of revenue.
$BYD already leads global EV unit volume. Price competition → thinner margins → analysts lower long term free cash flow forecasts →
$TSLA valuation compression.
