Investor's Corner
Tesla’s word of mouth strategy in focus: Why Elon Musk’s owner-based initiative works
Tesla’s (NASDAQ:TSLA) avoidance of traditional advertising initiatives is one of the most recognizable things about the company, yet it is one that has been questioned several times over the years by Wall Street analysts, investors and even avid fans. Yet, despite these questions, CEO Elon Musk’s answer has always been the same: Tesla does not do traditional advertising. Musk emphasized this point during the last earnings call too, stating that if Tesla would do some form of marketing, it would be strictly informational in nature.
“What we’re seeing is that word of mouth is more than enough to drive our demand in excess of production. We have no plans to advertise at this time. At some point in the future, we may do advertising not in the traditional sense but more to just inform people and make sure they are aware of the product, but not engage in the typical trickery that is commonplace in advertising,” Musk said.
In a conversation with Teslarati, investor and economist @Incentives101 explained that if one looks at Tesla’s word-of-mouth strategy from a mathematical perspective, it would seem that Elon Musk’s stern stance against traditional advertising may actually be well justified. Considering the manner that Tesla has been growing so far, the economist noted that “Elon is probably right. They don’t need advertisement and probably will never need it.” The following sections explains this point.
How Customers Learn About Tesla
There are generally three ways a new customer could learn about Tesla and its products: 1)Elon’s/Tesla goodwill, 2) customers’ own research, or 3) through an existing Tesla owner. Tesla relies heavily on current owners spreading the word and converting people they know into new electric car owners. Most people call this strategy the “Network Effect,” but the economist states that this is a misinterpretation.
“The Network Effect is technically applied to how a product increases its value from a network. The telephone is the most obvious example. One or two telephones in the world are useless, but the more there, are the more useful they become. In a way, you have to treat this like a disease. If you analyze (Tesla’s) strategy, you not only need information to flow. You need the information that changed hands to have an effect. In this case, the purchase of another Tesla. The most similar models to this strategy out there are how diseases spread,” the investor said.
These mathematical models try to predict how a disease will be spread considering different assumptions and variables. Among those variables are the number of susceptible individuals, of infected people and of recovered people, as well as the rate of contagion. For purposes of this illustration, information is equal to a virus and the main variables are the number of people that want to buy a car in that period of time within a target price range or TCO (susceptible individuals), the number of owners at the time (infected people), and the average number of people that an owner would convert in that period of time (contagion). This will be referred to in this article as the ‘T’ variable.
How Tesla spreads
The investor explains this further in the following statement. “The easiest way to understand this is the following. Imagine you’re looking at a decision tree. Each node is a new person with a Tesla in a period of time and how many nodes come out of that person is our ‘T.’ In each period of time that you’d want to measure, there are more assumptions that would need to be made. For example, an owner never ‘recovers’ so not only they ‘infect’ people but they will be contagious in perpetuity.
“Let’s analyze the spectrum of possible solutions. If T>=1, it would mean that information is flowing very efficiently and it will behave exponentially even if the time it takes for an owner to spread enough information to convert someone is relatively high. You need to consider that today, there are more than half a million owners. The faster the person transmits the ‘virus,’ the better,” he said.
There is no way to approximate these variables with the information available to us today. But recently, Tom Randall from Bloomberg released the findings of a study involving 5,000 Model 3 owners. According to the study’s results, 99% of Model 3 owners are pretty much satisfied with the vehicle, and they are willing to recommend the electric car to friends and family. A number of assumptions could be drawn from these results, as per the investor.
“If you consider what would be the worst scenario for Tesla, it would mean a very long time for contagion to spread, with the ‘T’ variable being very close to zero. But with the information provided in the Bloomberg report, there is a very high probability that ‘T’ is not close to zero at all. Instead, there’s a good chance that ‘T’ is probably very close to 1,” the economist said.
Growing Without Traditional Advertising
These assumptions would mean that Tesla can continue to grow without engaging in traditional advertising. Looking at Tesla’s history, we can see that this strategy or combination of strategies have worked. But is there an optimal time to have an information campaign? “It seems that the sooner, the better” the investor explained. “If you look at how this strategy functions, theoretically, the best time to have an information campaign is when they’ll have the least amount of owners and when they’ll increase production dramatically. So in theory this means in the next few months as Tesla continues to hit its stride with Model 3 and begin producing the Model Y, high volume vehicle that Elon Musk expects will outsell the Model S, X, and Model 3 combined. This doesn’t mean they need one, it just means it could be the best time,” he added.
It wouldn’t be accurate to assume that this strategy or combination of strategies is what creates demand. Any company could choose to have either this strategy or spend millions of dollars in advertising and demand wouldn’t necessarily go up or down. “Consumers need information to make decisions — it’s a very important factor — but demand is a function of several factors, particularly consumer preferences. Under perfect information, there is zero doubt demand for Tesla’s will rise as we explained in this note,” the investor noted.
“Tesla’s word-of-mouth strategy helps spread information, but if this product didn’t have a fundamental effect in consumers, it wouldn’t really matter. I’m confident that if banks or media had someone looking at this problem from the consumer side, we would never see a note about alleged ‘demand problems’ again. Tesla has never had a demand problem and data shows that they won’t face one. But they might face an information gap, particularly with how media misinforms consumers,” the economist said.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
Elon Musk
SpaceX IPO could push Elon Musk’s net worth past $1 trillion: Polymarket
The estimates were shared by the official Polymarket Money account on social media platform X.
Recent projections have outlined how a potential $1.75 trillion SpaceX IPO could generate historic returns for early investors. The projections suggest the offering would not only become the largest IPO in history but could also result in unprecedented windfalls for some of the company’s key investors.
The estimates were shared by the official Polymarket Money account on social media platform X.
As noted in a Polymarket Money analysis, Elon Musk invested $100 million into SpaceX in 2002 and currently owns approximately 42% of the company. At a $1.75 trillion valuation following SpaceX’s potential $1.75 trillion IPO, that stake would be worth roughly $735 billion.
Such a figure would dramatically expand Musk’s net worth. When combined with his holdings in Tesla Inc. and other ventures, a public debut at that level could position him as the world’s first trillionaire, depending on market conditions at the time of listing.
The Bloomberg Billionaires Index currently lists Elon Musk with a net worth of $666 billion, though a notable portion of this is tied to his TSLA stock. Tesla currently holds a market cap of $1.51 trillion, and Elon Musk’s currently holds about 13% to 15% of the company’s outstanding common stock.
Founders Fund, co-founded by Peter Thiel, invested $20 million in SpaceX in 2008. Polymarket Money estimates the firm owns between 1.5% and 3% of the private space company. At a $1.75 trillion valuation, that range would translate to approximately $26.25 billion to $52.5 billion in value.
That return would represent one of the most significant venture capital outcomes in modern Silicon Valley history, with a growth of 131,150% to 262,400%.
Alphabet Inc., Google’s parent company, invested $900 million into SpaceX in 2015 and is estimated to hold between 6% and 7% of the private space firm. At the projected IPO valuation, that stake could be worth between $105 billion and $122.5 billion. That’s a growth of 11,566% to 14,455%.
Other major backers highlighted in the post include Fidelity Investments, Baillie Gifford, Valor Equity Partners, Bank of America, and Andreessen Horowitz, each potentially sitting on multibillion-dollar gains.
Elon Musk
Elon Musk hints Tesla investors will be rewarded heavily
“Hold onto your Tesla stock. It’s going to be worth a lot, I think. That’s my bet,” Musk said.
Elon Musk recently hinted that he believes Tesla investors will be rewarded heavily if they continue to hold onto their shares, and he reiterated that in a new interview that the company released on its social accounts this week.
Musk is one of the most successful CEOs in the modern era and has mammothed competitors on the Forbes Net Worth List over the past year as his holdings in his various companies have continued to swell.
Tesla investors, especially those who have been holding shares for several years, have also felt substantial gains in their portfolios. Over the past five years, the stock is up over 78 percent. Since February 2019, nearly seven years ago to the day, the stock is up over 1,800 percent.
Musk said in the interview:
“Hold onto your Tesla stock. It’s going to be worth a lot, I think. That’s my bet.”
Elon Musk in new interview: “Hold on to your $TSLA stock. It’s going to be worth a lot, I think. That’s my bet.” pic.twitter.com/cucirBuhq0
— Sawyer Merritt (@SawyerMerritt) February 26, 2026
It’s no secret Musk has been extremely bullish on his own companies, but Tesla in particular, because it is publicly traded.
However, the company has so many amazing projects that have an opportunity to revolutionize their respective industries. There is certainly a path to major growth on Wall Street for Tesla through its various future projects, including Optimus, Cybercab, Semi, and Unsupervised FSD.
- Optimus (Tesla’s humanoid robot): Musk has discussed its potential for tasks like childcare, walking dogs, or assisting elderly parents, positioning it as a massive long-term driver of company value.
- Cybercab (Tesla’s robotaxi/autonomous ride-hailing vehicle): a fully autonomous vehicle geared specifically for Tesla’s ride-sharing ambitions.
- Semi (Tesla’s electric truck, with mentions of expansion, like in Europe): brings Tesla into the commercial logistics sector.
- Unsupervised FSD (Full Self-Driving software achieving full autonomy without human supervision): turns every Tesla owner’s vehicle into a fully-autonomous vehicle upon release
These projects specifically are some of the highest-growth pillars Tesla has ever attempted to develop, especially in Musk’s eyes, as he has said Optimus will be the best-selling product of all-time.
Many analysts agree, but the bullish ones, like Cathie Wood of ARK Invest, are perhaps the one who believes Tesla has incredible potential on Wall Street, predicting a $2,600 price target for 2030, but this is not even including Optimus.
She told Bloomberg last March that she believes that the project will present a potential additive if Tesla can scale faster than anticipated.
Elon Musk
Tesla stock gets latest synopsis from Jim Cramer: ‘It’s actually a robotics company’
“Turns out it’s actually a robotics and Cybercab company, and I want to buy, buy, buy. Yes, Tesla’s the paper that turned into scissors in one session,” Cramer said.
Tesla stock (NASDAQ: TSLA) got its latest synopsis from Wall Street analyst Jim Cramer, who finally realized something that many fans of the company have known all along: it’s not a car company. Instead, it’s a robotics company.
In a recent note that was released after Tesla reported Earnings in late January, Cramer seemed to recognize that the underwhelming financials and overall performance of the automotive division were not representative of the current state of affairs.
Instead, we’re seeing a company transition itself away from its early identity, essentially evolving like a caterpillar into a butterfly.
The narrative of the Earnings Call was simple: We’re not a car company, at least not from a birds-eye view. We’re an AI and Robotics company, and we are transitioning to this quicker than most people realize.
Tesla stock gets another analysis from Jim Cramer, and investors will like it
Tesla’s Q4 Earnings Call featured plenty of analysis from CEO Elon Musk and others, and some of the more minor details of the call were even indicative of a company that is moving toward AI instead of its cars. For example, the Model S and Model X will be no more after Q2, as Musk said that they serve relatively no purpose for the future.
Instead, Tesla is shifting its focus to the vehicles catered for autonomy and its Robotaxi and self-driving efforts.
Cramer recognizes this:
“…we got results from Tesla, which actually beat numbers, but nobody cares about the numbers here, as electric vehicles are the past. And according to CEO Elon Musk, the future of this company comes down to Cybercabs and humanoid robots. Stock fell more than 3% the next day. That may be because their capital expenditures budget was higher than expected, or maybe people wanted more details from the new businesses. At this point, I think Musk acolytes might be more excited about SpaceX, which is planning to come public later this year.”
He continued, highlighting the company’s true transition away from vehicles to its Cybercab, Optimus, and AI ambitions:
“I know it’s hard to believe how quickly this market can change its attitude. Last night, I heard a disastrous car company speak. Turns out it’s actually a robotics and Cybercab company, and I want to buy, buy, buy. Yes, Tesla’s the paper that turned into scissors in one session. I didn’t like it as a car company. Boy, I love it as a Cybercab and humanoid robot juggernaut. Call me a buyer and give me five robots while I’m at it.”
Cramer’s narrative seems to fit that of the most bullish Tesla investors. Anyone who is labeled a “permabull” has been echoing a similar sentiment over the past several years: Tesla is not a car company any longer.
Instead, the true focus is on the future and the potential that AI and Robotics bring to the company. It is truly difficult to put Tesla shares in the same group as companies like Ford, General Motors, and others.
Tesla shares are down less than half a percent at the time of publishing, trading at $423.69.
Tesla FSD (Supervised) fleet passes 8.4 billion cumulative miles
Elon Musk fires back after Wikipedia co-founder claims neutrality and dubs Grokipedia “ridiculous”
