Tesla is Rallying Again. Most Thought it Would Drop

Fill your boots, as they say. An opportunity to make money both on the way up and on the way down is here again, like last December.

• Tesla is rallying hard on record-high call option volumes because Musk needs the share price to be high ahead of Tesla’s November 6 shareholders meeting (there’s a $1 trillion CEO compensation award and more at stake).

• A small Twitter account on a Space last month said all the Wall Street guys were “morons” for talking about valuations, profit margins, risks, etc., because it was all “bullsh*t”. I felt both insulted and embarrassed at the same time, because he was right, and this is exactly what we’re facing with Tesla right now: all that matters is the stock being above $350 for now, $400 by month’s end, and maybe $500 by the shareholders’ meeting on November 6th.

• Tesla peaked out at 150x 2025 EPS estimates of $3.21 at its all-time high of $480 on December 17th last year. Current 2025 estimates have almost halved to $1.69, so Tesla now trades at 238x earnings (see Figure 2), but we’re in a different market environment with AI and Musk’s political powers.

• Musk’s traders are skilled at drawing blood from stones and juicing the stock price via the options market (see Figure 1). Despite 5-year lows in profits so far this year, Tesla’s stock is up by 72% over the last 12 months due to the adept use of Tesla’s options market, which sometimes trades more in value than the S&P 500’s options market.

• If they’re trying to lift the stock price ahead of the November 6th shareholders’ meeting, shouldn’t we go long? When Musk had to cover his tax bill in November 2021, he sold $16 billion of his Tesla shares to save $11 billion in taxes. This time, he’s got a $2.45 trillion (29% of shares) proposition on the table.

• Figure 4 below shows the past 8 big rallies in Tesla since 2020, with the stock’s percentage rise during each rally, and how many days the call option volumes were above the 30-day moving average. All but 2 of these 8 “rallies for no reason” benefited Tesla in the early days (to raise cash and pay down debt) and Musk thereafter (tax bills, Twitter purchase, margin loans, etc.).

• This rally is a blatant sign of how self-serving Musk is with shareholders’ money. Having run Tesla’s EBIT margin down from a peak of 17% in the 1H of 2022 to 3% in the 1H of 2025 would’ve gotten him fired at any other company.

• Expect insane catalysts that sound stupid but spike the share price ahead of the November 6th shareholders’ meeting: Tesla rose by 6% on massive call buying on Thursday because news of receiving their robotaxi testing permit in Nevada (it’s all a show, given that Tesla’s self-driving technology can only drive 30 miles before needing human intervention). Yesterday, it rose by another 7% for no reason, except for record-high call options volumes.

• Beware the Ides of October: While the market may be eyeballing November 6th as the maximum pump of Tesla’s stock by the Vested Interests, it could happen before Q3 2025 earnings around the last week of October (which I expect to be more fraudulent than normal, given no regulators left and $2.45 trillion staring Elon Musk in the face). There’s a major court ruling that could be reported during the first week of October (see details below), which would crush Tesla.

• If Tesla is forced to trade at rival AI multiples, it’s worth $66 based on consensus 2026 EPS of $2.40 and the average PER of 27x. If it’s valued as a carmaker, it’s even more embarrassing: the 2026 average for the top 12 carmakers is 7.2x EPS, so Tesla would be worth $17 (see Figures 5 and 6 below).

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Tesla has risen by 17% in the past six trading days for no apparent reason, which has happened at least once a year since 2020, except for 2022, when the Nasdaq dropped by 33%.

If one were to single out a possible catalyst for this rally, it’s likely the news on September 5th that Musk has a $1 trillion pay package up for a vote at the November 6th shareholders meeting (as mentioned in my report on Monday).

And if you think “that’s ridiculous” or “Tesla is overvalued”, please see my report from last December (here), which details all the rallies for no reason since January 2, 2020, and how most of them have benefited either Tesla or Musk.

The 2 main reasons that lead me to believe that this rally aims to get Tesla’s share price as high as possible ahead of the November 6th shareholders meeting are as follows:

• Musk has a $1 trillion CEO performance award up for a vote, which would make his stake in Tesla 29% and worth $2.45 trillion if he manages to get Tesla to the market cap milestone of $8.5 trillion by 2030.

• As important, from a liquidity standpoint for Musk, is the shareholders’ vote on whether Tesla can invest in Musk’s AI start-up, xAI, in which he holds a 54% stake. It’s a yes or no vote, with the amount Tesla invests to be decided by the Board. This is very sketchy and implies it could be more than the $5 to $10 billion range previously discussed, but it signals at least $2.7 billion to $5.4 billion of immediate cash for Musk.

With all this money to be had (by Musk’s design), I fully expect Q3 deliveries on October 2nd and Q3 earnings around October 23rd to be spectacular. Here are some catalysts already in the making: