Tesla Derives Much Of Its Value From Implicit And Explicit Subsidies. Valuation Upon That Premise

Tesla car buyers and Tesla itself gets indirect subsidies in the form of emission credits.

Since 2008 Tesla got around 14.3 billion USDs of emission credits disbursed by the US government from money gotten from the other combustion engine automobile producers active in the USA.

Without these 14.3 billion USDs Tesla would have most probably been unprofitable.

In addition Tesla got an estimated 3.4 billion USDs from an $7,500 tax credit for EV buyers which ended in 2019. This perk essentially allowed Tesla to sell American-made electrical vehicle at a higher price than manufacturing without the subsidy would have allowed. 

Elon Musk himself admitted that Tesla was on the verge of bankruptcy in 2019.

In short, Tesla's intrinsic worth is 120 billion USD and this is the value of the electric vehicle technology itself. Because Tesla would be unprofitable, loss making without the implicit and explicit government subsidies.

The issue is the electric vehicle engine requires large quantities of ferrous metals, namely lithium, cobalt, nickel copper and other expensive ferrous metals. This makes producing electric vehicles currently unprofitable, Basically, if a car company produces electric vehicles without implicit and explicit government subsidies the automobile manufacturer looses money. 

Essentially, Tesla and electric vehicle manufacturers essentially need to achieve a technological, engineering breakthrough to produce electric cars profitably.

If Tesla does not achieve a technological breakthrough, its value could go to 0, zero. It could become insolvent.

A lot of the value of Tesla, according to Wall Street investors and equity research analysts and Silicon valley investors and technologists comes from the promise of robotized taxi manufacturing and humanoid robots production by Tesla.

This is basically an option on the future. A claim on a future technological breakthrough to produce robotized taxis and humanoid robots. Self-driving cars have been a goal of the car manufacturing industry since the 1950's when the head of Daimler, the producer of the Mercedez brand said that self-driving cars will be a reality in 30 years.

Yes. If Tesla achieves a technological breakthrough and starts producing electrical vehicles and starts producing robotized taxis and humanoid robots, than it might substantiate its current market capitalization.

Can Private Credit Recover From The Current Crisis?

 

If artificial intelligence, AI does not prove to be a bubble and does not burst, defined by the Nasdaq Composite falling 62 % or more, private credit asset managers will recover their balance and most of their positions.

If AI proves to be the largest bubble in history and bursts, the constant capital raising and investing and buying up high interest credit and companies along and selling them off in opportune times, defining the private credit asset managers' business model will prove untenable and they can face solvency issues. 

Is SpaceX Actually A Space Natural Resources Mining Investment Play?

 

SpaceX is touted by Wall Street investors, equity research analysts and Silicon Valley investors and technologists as satellites in space, internet beamed by satellites, space rockets launch infrastructure and artificial intelligence, AI chat bot investment opportunity.

With the future growth forecast by Wall Street equity research analysts to come roughly 70 % from AI chat bots and 30 % from satellites launching in space and the associated internet.

Actually, SpaceX could be a space mining for base metals, precious metals and rare earths and other resources investment operation. There are many proofs and observations that asteroids from space contain huge, possibly hundreds of trillions of USDs or even more potential for base metals, precious metals and rare earths and other resources extraction. Other planets according to various studies and observations most certainly huge, possibly hundreds of trillions of deposits of base metals, precious metals and rare earths and other resource.

So SpaceX could actually be a way to put mining infrastructure in space on asteroids, the Moon, Mars, Jupiter mainly and other planets which could be used to mine the possibly hundreds of trillions of USDs or even more potential for base metals, precious metals and rare earths contained there in.

SpaceX now provides the rockets which could potentially get people on asteroids, the Moon, Mars, Jupiter mainly and other planets, also the satellites which could provide the infrastructure there, also the internet.

So, basically SpaceX could be an investment to build a base on asteroids, the Moon, Mars, Jupiter mainly and other planets to mine the base metals, precious metals and rare earths and other resources deposits which some estimate to be hundreds of trillions of USDs or more.

The Grok AI could also prove useful chat bot to mine the base metals, precious metals and rare earths and other resources deposits in Space.

However, first SpaceX has to achieve overall profitability to finance the mining of the base metals, precious metals and rare earths and other resources deposits in space on the Moon, Mars, Jupiter mainly and other planets. Investor money only could not prove enough. And investor money could suffer a 'sudden stop' if SpaceX does not show a clear path for profitability.

Currently, SpaceX's intrinsic value is about 210 billion USDs and only if the Grok chat bot AI investments losses are significantly reduced in the very near term. That compares with SpaceX's current 1.91 trillion exorbitant market capitalization. 

To mine the possibly hundreds of trillions of deposits on asteroids, the Moon, Mars, Jupiter mainly and other planets other companies are needed to provide the ecosystem of space base equipment, rockets, infrastructure, internet, mining equipment, food, drinks, etc. 

Private Credit Hold Off Large Part Of Redemptions

 

According to various sources various private credit asset managers have held off roughly 40 % of the recent redemption requests.

Big private credit asset managers like Blackstone, BlackRock, KKR, Apollo, Carlyle TPG, Ares, Blue Owl, Parners Group, CVC, EQT are trying to weather the recent storm engulfing the sector after the bankruptcies of Tricolor, First Brands, Market Financial Solutions caused a large wave of redemption requests since late 2025

Private credit asset managers answered by gating the investments outflow.

As long as the AI boom does not turn out to be a bubble defined by the Nasdaq Composite falling by more than 45 % from its peak, private credit will be able to absorb the current difficult times.

 

What If AI Turns Out To Be A Bubble And Bursts?

 

If AI turns out to be a bubble and busts there are two possible scenarios:

1) Mild realistic scenario:

The Nasdaq Composite falls 46 % from its peak.

1) Apple's market capitalization falls to 1.7 trillion USDs from 4.53 trillion USDs currently.  

2) Microsoft's market capitalization falls to 1.4 trillion USDs from 2.90 trillion USDs currently

3) Alphabet's market capitalization falls to 2.0 trillion USDs from 4.36 trillion USDs currently.

4) Amazon's market capitalization falls to 1.5 trillion USDs from 2.61 trillion USDs currently

5)  Meta's market capitalization falls 800 billion USDs from 1.48 trillion USDs

6) Tesla's market capitalization falls to 0.5 trillion USDs from 1.23 trillion USDs currently

7) NVIDIA's market capitalization falls to 2.3 trillion USDs from 4.71 trillion USDs currently 

 

1) Pessimistic scenario scenario:

The Nasdaq Composite falls 62 % or more from its peak.

1) Apple's market capitalization falls to 800 billion USDs from 4.53 trillion USDs currently.  

2) Microsoft's market capitalization falls to 600 billion USDs from 2.90 trillion USDs currently

3) Alphabet's market capitalization falls to 700 billion USDs from 4.36 trillion USDs currently.

4) Amazon's market capitalization falls to 600 billion USDs from 2.61 trillion USDs currently

5) Meta's market capitalization falls 400 billion USDs from 1.48 trillion USDs

6) Tesla's market capitalization falls to 120 billion USDs from 1.23 trillion USDs currently

7) NVIDIA's market capitalization falls to 420 billion USDs from 4.71 trillion USDs currently 

 

Actually in a worst case scenario the Nasdaq Composite could fall 82 % or more as in the Dot Com boom and bust.

In such a worst case the Magnificent 7 stocks Apple, Microsoft, Alphabet, Amazon, Meta, Tesla and NVIDIA's market capitalization could fall 80 % or more from their current levels.

 

Will The Coming IPO Boom Be A Precursor To An AI Bust? SpaceA, OpenAI, Anthropic

OpenAI, Anthropic, SpaceX along with spades of other technology companies and companies from other sectors are about to stage an IPO in 2026, according to various media reports. SpaceX already did its IPO.

OpenAI raised 122 billion USDl currently at a post money 852 billion USDs valuation, Anthropic raised 65 billion USD at 965 billion USDs post money valuation and SpaceX staged an IPO on Thursday last week and is currently valued at 2.43 trillion USDs, 15 % above its IPO price.

OpenAI, Anthropic, SpaceX's AI business are currently heavy loss making. SpaceX' AI business recorded a net loss of (6.36) billion USDs.

If OpenAI, Anthropic which loose billions of USDs per year complete a successful IPO and other companies from other sectors that are also loss making complete also IPOs successfully, this could signal that we are in an artificial intelligence, AI bubble, which inflates assets across the global economy.

At the peak of the internet Dot Com bubble and subsequent bust, companies, which either had no revenue or were heavy loss making were staging IPOs and that signaled the peak of the internet Dot Com bubble.

Now, many analysts and investors say companies like OpenAI, Anthropic, SpaceX and even the magnificent 7 Apple, Microsoft, Alphabet, Amazon, Meta, Tesla and NVIDIA have revenue and that could substantiate their high for the magnificent 7 valuations and exorbitant for OpenAI, Anthropic, SpaceX valuations. If the AI boom does not turn into a bust.

The coming sky high IPO valuations of  OpenAI, Anthropic and SpaceX's IPO already priced and with market capitalization of 2.43 trillion USDs along with spades of other technology companies could well signal the top of the current artificial intelligence, AI boom which could be followed by a bust, defined by the Nasdaq Composite falling more than 62 % from its recent stock market high.

 

SpaceX Valuation. On The Eve Of The IPO

SpaceX is now valued by public markets at 2.1 trillion USD.

There are three possible scenarios for Tesla's value in the future:

1) Current scenario based on the three most recent yearly financial reports of SpaceX: 

SpaceX is worth 210 billion USDs. This is only true if Tesla spins off or sells out of its loss making AI business and is left only with its Connectivity business which produced net income of 4.423 billion USD in the calendar 2025. SpaceX's space business had a net loss of (657) million USDs in 2025.

SpaceX's reported a loss of (4.276) billion USDs for the 1st Quarter of 2026 and a loss of (4.937) billion USD for the calendar 2026. 

2) Mild profitability scenario. 

SpaceX's AI business lives only partially to the extremely positive scenarios of some Wall Street equity research investors and analysts and SpaceX's AI business starts making 5 billion USDs in net profit on 18 billion USDs yearly revenue in 2030. SpaceX's overall revenue and profit reach 42 billion and 10 billion USDs in 2030 and grow by 5 % a year from there on for the next 10 years.

In such a scenario, SpaceX could be worth 1.1 trillion USDs

3) Huge success 'current' scenario.

SpaceX lives up to the some of the most optimistic current Wall Street equity research investors and analysts' estimates. 

For example SpaceX's AI business is a huge success and reaches 87 billion USDs in revenue and 15 billion USDs in net profit in the calendar 2040. SpaceX's connectivity business clocks in 40 billion USDs of revenue and 8 billion USDs of profit in 2040 and SpaceX's space business also starts making around 15 billion USDs in revenue and 3 billion USDs in profit by 2040.

In such a case SpaceX's value could reach 2.8 trillion USDs. 

  

Tesla Valuation. June 2026. On The Eve Of SpaceX IPO

 

Tesla's intrinsic value is 120 billion USD. This is the value of the electric vehicle technology, itself, which is pending on Tesla finding a way to produce electric vehicles profitably, without subsidies. Electric vehicles like Tesla's use large quantity of ferrous metals, which make producing electric cars unprofitable.

Since Tesla is getting somewhere around 7 500 USD subsidy per Tesla electric vehicle, Tesla is inherently unprofitable. In reality. An unprofitable business is worth 0.

So, in reality there are three scenarios for Tesla's worth:

1)  Tesla finds a path to minor profitability after subsidies via a technological breakthrough. In this case Tesla is worth 120 billion USD.

2) Tesla does not become profitable after subsidies. In this case Tesla is worth 0, zero.

3) Tesla develops a new profitable business like robotic taxis, which could make money for the company. The size of such a business could be worth between 100 billion USDs to 1 trillion USDs, depending on Tesla's market share.

Partners Group Limits Withdrawals From A Private Equity Fund. Implications For Private Equity And Private Credit

 

Partners Group, the Swiss based alternative assets manager capped withdrawals from one of its private equity funds.

The recent wave of withdrawals limits affected mainly private credit funds. Cliffwater, BlackRock, Blue Owl, Ares, etc. all set limits on withdrawals from private credit funds they manage in the months since the beginning of 2026.

Partners Group's shares slid 16 % on the day the company announced it limits withdrawals from its private equity fund and this triggered a wave of selling of leading listed private equity giants like Blackstone, KKR, EQT, CVC, Bridgepoint Group, TPG, Ares etc., because they are fears the recent private credit rout could affect the private equity funds.

As long as the AI boom does not turn into bust defined by the Nasdaq Composite falling more than 62 %, the private equity giants Blackstone, KKR, Carlyle, Apollo EQT, CVC, Bridgepoint Group, TPG, Ares, Blue Owl etc. and mid sized and small private equity managers and the private equity industry should turn out OK and it would be able to weather the current troubles.

NVIDIA Valuation Scenarios

 

NVIDIA's market capitalization is currently 5.2 trillion USDs

There are several scenarios possible:

 1) The AI boom which NVIDIA leads really is the fourth industrial revolution and changes the world more than even the internet boom. The Nasdaq Composite could double from current levels in such a case, In such a case NVIDIA's market capitalization could reach 9.3 trillion USDs

2)  The AI rally lives up to half the current hype. The Nasdaq Composite falls by 30 % from current levels. NVIDIA's market capitalization could fall to 2.1 trillion USDs in such a case

3) The AI boom turns into a bust defined by the Nasdaq Composite falling more than 65 % from current levels. NVIDIA's market capitalization could fall to 810 billion USDs in such a case

 

The Embedded Leverage In Private Credit

 

The leading private credit firms Blackstone, Blackrock, KKR, Carlyle, Apollo, Ares, Blue Owl, TPG, Partners Group, EQT, CVC etc. disburse loans often 7 % to 15 % interest rates to clients, many of which a mid sized technology firms.

Many of these firms are considered risky and unbankable by money center banks as JPMorgan, Bank of America, Wells Fargo, Citi, Goldman Sachs, Morgan Stanley, etc. 

The high interest rates of private credit create operational leverage, whereby if the firm that receives the loan, develops very well, grows revenue fast and reaches profitability the private credit loan enhances the profitability and growth of the company. Contrary, if the firm goes into trouble, stops growing revenue and becomes loss making the high interest rates of 7 % to 15 % on the private credit loan stifle the firm even further, a sort of negative compounding.

So private credit is a natural amplifier.

The private credit industry manages 2.5 trillion USDs.

Barring a technology, AI lead bust the private credit industry should weather the current storm of First Brands, Tricolor, MFS and the redemption wave.

Private Credit's Main Client Is AI

 

The largest parts of the private credit industry's 2.5 trillion USDs assets under management are intertwined with the artificial intelligence, AI boom.

Wall Street equity research analysts estimate that 25 % to 35 % of the private credit industry's 2.5 trillion USDs assets under management are exposed to the risk of AI disruption.

Other sources say 20 % of the private credit industry's loans are directly tied to software.

So if the current fourth industrial revolution or the AI boom pops and the Nasdaq Composite plummets by 62 % or more, Blackstone, BlackRock, TPG, Carlyle, Apollo, KKR, Ares, Blue Owl, EQT, Partners Group, CVC etc. leading private credit asset managers and mid-sized  private credit asset managers could incur losses in their assets under management of 250 billion USD in mild losses scenario, 350 billion USDs in middle sized losses scenario, 500 billion USDs in worst case scenario and 1.2 trillion USDs in a catastrophic scenario, according to Wolfteam Ltd.'s projections and estimates.

Even the worst case should be absorbed by the global economy without a Great Recession 2008-2009 style economic loss. 

As long as the banking sector is not horrendously hurt by a credit crisis. 

The probability of which is 16 % currently. 

Will The Current Private Credit Difficulties Crash The Global Economy?

 

 Most probably not.

The private credit industry's assets under management are around 2.5 trillion USD, most probably not big enough to bring down the banking sector which participated with loans along the private credit disbursed by Blackstone, Blackrock, KKR, TPG, Apollo, Carlyle, Ares, Blue Owl, EQT, Partners Group etc.

However, if the AI boom turns into a bust, in a worst case scenario around 1.2 trillion USDs of the private credit industry's assets under management could be wiped out, according to Wolfteam Ltd.'s projections and estimates. There is no data how much banks have lent along into private credit financed deals.

Such a shock could possibly rattle the global banking sector. And if to that is added the losses on regular bank loans to the technology sector, AI and software especially, a new credit crisis could unfold.

Bur these are too many interconnected events to simultaneously unfold for the time being.

AI continues its fourth industrial revolution, barring a bust followed by wide scale defaults.

Alphabet Raised 60 Billion USD In Bonds In Four Months. Are Hyperscalers Getting Overextended?

 

Alphabet, the owner of the Google search engine is about to raise 60 billion USDs in bonds in the last four months. It raised the money not only in USD, but also in British pounds, Canadian dollars Swiss francs and Japanese yen.

Other hyperscalers like Meta, owner of Facebook have borrowed intensively to finance the huge capital expenditures in artificial intelligence, AI.

Amazon, Alphabet, Meta and Microsoft plan, taken together to invest in AI and cloud infrastructure, i.e. AI data centers and energy to power these data centers 750 billion USDs in 2026 alone according to their latest quarterly reports!

Much of the money will be borrowed.

No one from Amazon, Alphabet, Meta and Microsoft apparently wants to miss on the artificial intelligence, AI data center wave. Fear Of Missing Out, FOMO is rife in Silicon Valley. Apparently according to most of the leading technologists and technology investors it will be one winner to rule them all. Or at most 2.

The artificial intelligence, AI fourth industrial revolution will have many winners in hardware, software, energy infrastructure, according to Wolfteam Ltd.'s projections and estimates.

Amazon, Alphabet, Meta and Microsoft have fortress balance sheets with tens of billions of USDs of cash on them in each case.

However, the planned 750 billion USDs in investment is a huge sum of money and Amazon, Alphabet, Meta and Microsoft could easily run into hundreds of billions of USDs of debt which could threaten their operational excellence, namely to produce huge multi billions of USD of revenue and profit.

In end effect over-extension of AI investment could threaten the existence of Amazon, Alphabet, Meta and Microsoft if artificial intelligence, AI does not produce the envisaged benefits in productivity. A large increase in expected productivity could bring huge increases in revenue and profit for Amazon, Alphabet, Meta and Microsoft.

But this is only a rosy, positive assumption, expectation. If it does not come true or even comes true partially the very existence of Amazon, Alphabet, Meta and Microsoft could be threatened if they go on to burrow hundreds of billions of USDs.

One should bear in mind the non negligible probability of recession caused by let's say high oil prices, a new geopolitical conflict, a pandemic, banks bringing onto their balance sheets trillions of USDs of off balance liabilities, limit of chip technology production, sharp drop in technological productivity, etc.

All these events, if they cause a deep global recession will decrease by tens of percentages the revenues and profits of Amazon, Alphabet, Meta and Microsoft or even drive them in net losses, which could threaten Amazon, Alphabet, Meta and Microsoft's very existence.

But for nor, the positive and full of optimism artificial intelligence, AI train is going in full speed ahead. 

KKR Refunds 350 Million USD In Carried Interest

KKR, The New York-based alternative asset manager said it would refund $350 million in previously paid-out carried interest to investors in its second private equity fund in Asia.

This is the latest in a string of setbacks for the private equity and private credit industry.

The Tricolor, First Brands and Market Financial Services(MFS) bankruptcies have already caused a stir for the private credit industry.

Still, the private credit sector at 2 trillion USDs of assets under management seems big enough to absorb these shocks.

If the Federal Reserve does not raise interest rates abruptly and there is no AI technology bust, the private credit sector should weather the storm in 2 to 3 years.

Will Private Equity, Private Credit Recover Fast From The Recent Turmoil?

 

First Brands, Tricolor, Market Financial Services' sudden bankruptcies triggered a small run on leading private credit firms especially and private credit asset managers also like Blue Owl, Ares, BlackRock, Blackstone, Apollo etc.

Since there have been no other high profile bankruptcies of companies which took out high yield loans, it seems the private equity and private credit industry will recover from the shock in a year or so.

Provided that the AI boom does not turn to a bust or there is no other geopolitical or macroeconomic shock.

The recent redemptions from private credit funds staved off and the first quarter results of private equity and private credit firms were good. 

So private equity and private credit asset managers are on a recovery trajectory. 

Ares First Quarter 2026 Results

 

Ares Management Corp  wrote the following in its First Quarter 2026 Earnings Press Release:

 'GAAP net income attributable to Ares Management Corporation was $142.6 million for the quarter ended March 31, 2026. On a basic and diluted basis, net income attributable to Ares Management Corporation per share of Class A and non-voting common stock was $0.46 for the quarter ended March 31, 2026.

After-tax realized income was $452.4 million for the quarter ended March 31, 2026. After-tax realized income per share of Class A common stock was $1.24 for the quarter ended March 31, 2026. Fee related earnings were $464.4 million for the quarter ended March 31, 2026.'

Ares Management's stock price is down circa 40 % from its recent peak driven by the turmoil in the private credit business, namely the bankruptcies of Tricolor, First Brands Group and Market Financial Solutions.

Since private credit usually gives out credits with between 7 % and 15 %, even 20 % interest rates many a times to finance mid cap technology firms private equity buyouts, bankruptcies as Tricolor, First Brands Group and Market Financial Solutions are to be expected. This can not be called normal line of business, but given the inherent leveraged nature of private credit, especially when the private credit loans written are used to finance private equity buyouts, there are bound to be bankruptcies.

Circa 30 % or even more according to some analysts of the private credit loans are disbursed to technology, even artificial intelligence, AI related firms. Some of them loosely related as healthcare AI and energy related AI infrastructure.

If the AI boom does not turn into a bust defined by the Nasdaq Composite falling more than 62 % of its recent peak, private credit loans flows and private credit giants as Ares, Carlyle, Apollo, Blue Owl etc.'s stock prices should start to recover. 

A key risk to the AI trade are the coming high profile IPOs of ChatGPT, Anthropic and the combined SpaceX and xAI entity. It they are successful, there is the risk they will sap large scale capital from other AI technology firms. Both that or if the coming AI IPOs flop, could cause a large correction in the Nasdaq Composite and by extension the S&p 500, Dow Jones Industrial Average and most probably global stock markets.