Why are Tesla investors still so bearish after all of Elon Musk’s efforts and the stock surging?

Tesla’s stock just jumped 7.7% in after-hours trading, but investors are still bailing like the ship’s leaking. Elon Musk says he’s stepping back from politics to focus on the company, but that isn’t stopping long-time supporters from walking away.

On Wednesday, investment adviser and Tesla whale Gary Black said he had finally sold his entire position in the company. That’s the first time since 2021 that he’s held zero Tesla shares. According to a statement he shared on X, the valuation has completely broken away from fundamentals.

Gary said he sold the rest of his position at $358 per share. “We believe TSLA’s valuation has become disconnected from underlying fundamentals,” he said. His biggest concern is that Tesla’s 2025 P/E ratio has hit 188x while earnings estimates keep sliding — down 5% just last week, and already 40% down this year.

The company’s deliveries are weak, especially April numbers. He said he expects second-quarter deliveries to fall by 12% year-over-year, with the full year down 10%. That’s worse than Wall Street’s own cuts of 7% and 5%, respectively.

Gary also warned about the upcoming robotaxi test in Austin, calling the risk one-sided in the wrong direction. And even the supposed “affordable” car due in July doesn’t excite him — he believes it’s just a low-budget Model Y, not a new model that would actually grow Tesla’s reach.

“This increases odds that FY’25 estimates decline further,” Gary said, predicting a repeat of the 2023-2024 slump when Tesla dropped prices but didn’t boost sales. He’s holding a 6-to-12-month price target of $310.

That’s based on an estimate of 5.4 million vehicles in 2030, adjusted earnings of $12, and a two-times PEG ratio on future earnings growth. Discounting all that with a 14.2% cost of equity brings it back down to $310, not the $358 it’s currently trading at.

Shareholders demand Elon show up and work 40 hours weekly

At the same time, a group of activist shareholders sent a letter to Tesla board chair Robyn Denholm asking that Elon start working at least 40 hours a week at Tesla. The letter, signed by SOC Investment Group and other smaller investors, came as a response to what they call a growing crisis inside the company.

Together, these shareholders control about 7.9 million shares — a small slice of Tesla’s 3.22 billion total — but they’re making a lot of noise. The shareholders called out Elon’s year-long focus on politics, especially his role leading the US DOGE Service under President Trump, which they blame for the company’s battered image and plunging sales.

Tesla’s latest earnings call revealed a 71% fall in profit and a 13% dip in sales compared to the same time last year. The letter called the situation “a crisis,” saying the board has failed to act in the best interests of shareholders.

“Tesla’s stock price volatility, declining sales, as well as disconcerting reports regarding the company’s human rights practices, and a plummeting global reputation are cause for serious concern,” it said.

They didn’t stop at just wanting Elon to show up more. The letter also demanded a real succession plan, a rule limiting outside board commitments, and a requirement to appoint a new board member who has no personal ties to anyone already there.

The board has long faced criticism for being too cozy with Elon. That got legal attention too. A Delaware judge struck down a $56 billion pay package for Elon in December 2024, citing his tight relationships with board members — including his brother. That legal fight started in 2018 when a shareholder who owned just nine shares filed the case.

Some of the same shareholders behind Wednesday’s letter were also involved last year in a campaign against Elon’s 2018 pay package. Back then, they warned that Elon was stretched too thin. They’re still saying it now: “The Board continues to allow Elon to be overcommitted, not demanding that he devote his attention to his role as CEO and ‘Technoking’ of Tesla.”