"Over the past year, on the day after Tesla unveils its latest quarterly report, this writer has calculated a metric I call the " Musk Magic" Premium. Put simply, the figure demonstrates how much of the EV pioneer's valuation is explained by its current performance, and what portion rests on investors' bet that Musk will deliver super-big on sundry promised innovations, from robotaxis to humanoid robots- areas where money-making versions haven't materialized, and keep getting delayed."
"To get there I start with GAAP net profits and adjust for two items. The first: sales of regulatory credits. They're already declining now that the Trump administration has waived a previous requirement that U.S. automakers pay what amount to Tesla and other EV-makers for failure to meet required targets for producing enough green vehicles themselves. Musk has acknowledged that the income stream from those payments will keep falling, then pretty much disappear."
A metric called the 'Musk Magic' Premium measures how much of Tesla's valuation is explained by current performance versus investor bets on future Musk-led innovations such as robotaxis and humanoid robots. The metric removes regulatory-credit sales and quarterly gains or losses from Bitcoin holdings to estimate bedrock, repeatable earnings using adjusted GAAP net income. Tesla reported record Q3 sales alongside weak profits and a market-cap surge that has doubled value since April, producing a large Magic Premium. Regulatory-credit revenues are declining due to regulatory changes, and Q3 net income was $1.372 billion, a 37% decline year-over-year.
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