Future Fund’s Gary Black Sells Remaining Tesla Shares, Believes Valuation is “Disconnected from Underlying Fundamentals”

This content does not constitute investment advice. The author does not hold any shares in the companies discussed.

Tesla: An AI Company or Just Another Automaker?

Elon Musk has consistently emphasized Tesla’s identity as an AI company, distancing it from the conventional limitations of typical automotive manufacturers. However, seasoned analysts grapple with this assertion because Tesla continues to generate the majority of its revenue through vehicle sales, even as Musk promotes ambitious projects like robotaxis and the Optimus humanoid robot.

A Divergence Between Valuation and Fundamentals

The widening gap between Tesla’s soaring valuation, which seems to factor in anticipated product launches, and its stagnant fundamental performance has prompted a notable shift among investors. Recent developments have driven one prominent Tesla supporter to reassess their position entirely.

Getting asked by a few followers today. Posted on Subscribers early this morning.

Yesterday, we sold the remainder of our $TSLA position at $358/share. This is the first time since 2021 we have not owned TSLA. As in late-November, which is the last time we reduced our TSLA… pic.twitter.com/hGvtja4RTR

— Gary Black (@garyblack00) May 28, 2025

The Exit: Gary Black’s Position on Tesla

Gary Black of Future Fund has completely divested his Tesla holdings, marking the first time since at least 2021 that he has no Tesla exposure. Black’s decision stems from several concerns regarding the current trades of Tesla stock, which is reflecting an astonishing 188x P/E ratio for the year 2025.

Moreover, Black anticipates a decline in Tesla’s automotive deliveries for the second quarter and the full year 2025, projecting decreases of 12% year-over-year (YoY) and 10% YoY, respectively. This contrasts with Wall Street estimates of only 7% and 5% reductions.

Concerns Over Valuation and Future Projects

In addition to valuation concerns, Black highlights the asymmetrical risk/reward dynamic associated with Tesla’s planned robotaxi tests. The company is set to introduce its unsupervised Full Self-Driving (FSD) system on the Model Y in Austin, Texas, this June, alongside a rollout of 10 to 20 robotaxis. By the end of 2025, Tesla aims to expand this service to various cities across the United States.

However, there are troubling signs as the Austin transportation department, emergency responders, and federal regulators have yet to receive essential information regarding the autonomy capabilities of the robotaxis at launch, according to a Fortune report. Furthermore, Tesla has not conducted training sessions for local emergency responders regarding the robotaxi operations.

Looking Ahead: Tesla’s Affordable Line and Market Impact

Beyond immediate valuation issues, Black expresses skepticism about Tesla’s upcoming affordable model. This offering is expected to lack a new design, merely representing a more basic version of existing models. Such a move could lead to a decrease in Tesla’s profit margins without significantly broadening its total addressable market (TAM).

As Tesla navigates this complex landscape, stakeholders will be watching closely to see how the company addresses its valuation challenges and future product strategy.

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