Tesla is Now Worth Half a Trillion Dollars (techcrunch.com) 123
Surging Tesla shares have pushed the company's market capitalization to more than $515 billion, a fivefold increase since the start of the year. From a report: The traditionally volatile stock has continued to experience price swings. But since reaching a low for the year in March, Tesla's share price has been on an upwards trajectory that accelerated in August. Tesla's share price, which rose 4.6% in morning trading to $545.62, has helped blast its CEO Elon Musk into the upper stratosphere of Bloomberg's Billionaire Index. As of Tuesday, Musk's net worth had risen $7.24 billion to more than $128 billion. Only Amazon's Jeff Bezos stands in his way to becoming the world's wealthiest person. Tesla shares have been fueled over the past week by news that it will be added to the S&P 500 index in December. Since Friday, the company has added more than $52 billion to its market cap -- the equivalent of adding nearly one and a half Ford Motor Co., to its valuation.
If I were them (Score:3, Insightful)
I'd sell. You can start multiple nicer businesses with half a billion.
Re:If I were them (Score:5, Insightful)
Tesla, VW, and Toyota are all worth hundreds of billions of dollars - enterprise value, not market cap. Market cap is just a fraction of a company's total enterprise value. The difference is that Tesla has almost no debt or other liabilities in comparison to the others, so it's enterprise value is almost entirely comprised of its market cap. Most of VW and Toyota's enterprise value is comprised of their liabilities.
To put it another way: bondholders own most of VW and Toyota (and most automakers), while stockholders own most of Tesla.
But describing things in terms of market cap misleadingly makes people think that Tesla, as a whole enterprise, is valued at many times higher than other major automakers. This is not true.
Re: (Score:3)
I said half a billion, the headline says half a trillion. My point still stands that you can start multiple nice businesses with 1/1000th the amount of money.
It's not unusual for large companies, especially in heavy industry, to have a lot of assets but also a lot of liabilities. It's kind of expected, if you're not investing in materials, tools, and growth then why are you sitting on a pile of money. Some of these Silicon Valley companies have piles of cash and diverse investments well outside of their no
Re: (Score:2)
Enterprise value
Re: If I were them (Score:2)
The Tesla's what?
And which Tesla do you mean?
Re:If I were them (Score:5, Insightful)
I remember the good old days when you'd buy something American-made from Sears. Then go back the next day to return it for one that isn't completely broken.
P.S. - I'm a GM truck owner. parts literally fall off it from time to time. Last week someone left some bolts or something resting on my hood because they thought it probably came from my truck. #RealTears
Re: (Score:2)
I may be older than you. I used to buy Craftsman tools at garage sales, take them home, break them, and then take them in to swap for a new one. I miss lifetime warranties, although I understand why they're gone.
Are you saying American robots (Score:2)
Worth (Score:5, Insightful)
Some people value Tesla that high, it doesn't mean its actually worth that much.
Re: Worth (Score:5, Insightful)
Sad news flash: That is, sadly, how the stock market acually works.
A "crash" is nothing more than a reality check. Preventing it merely means being in denial and bottling it up.
Re: Worth (Score:4, Informative)
A "crash" is nothing more than a reality check. Preventing it merely means being in denial and bottling it up.
100% underrated comment here at the time of writing this. Sadly I have no mod points to give you. One thing I would add is that distract or more disillusionment are viable options as well. But yeah, the stock market has no bearing on the actual economy, it's just a measure of how positive or negative some rich guys feelings about the economy currently stand. Which by-the-by, that means people's 401(k) are based off some rich farts feelings. It's a fun world we live in.
Re: Worth (Score:4, Interesting)
While a stock market isn't always an accurate reflection of an economy, the GP's comment applies equally well to most economies as a whole.
The "business cycle" is a pattern of hype and wild optimism leading to more and more stupid shit, followed by an inevitable correction. For the last ten years, for example, interest rates have been pretty much zero, which means money is basically free, and people can't figure out what to do with their free money so they're pouring it into whatever crazy scheme comes along. We, Theranos, whatever craziness hasn't crashed yet.
Re: Worth (Score:4, Insightful)
Not necessarily. The Stock market prices are strongly connected to Emotion. If they feel that something is good or bad, we can try to equate whatever numbers to it, but it all comes down to feeling.
A Crash often happens not from reality, where a solid company is doing something well, but from hearing something that puts people into a panic.
For Tesla it may be something like GM makes an Electric Truck. GM Making an Electric Truck doesn't spell doom for Tesla, the competition in the long term could even help them, however someone who feels that Traditional Automakers will kill Tesla once they go electric may panic and sell off their stock.
Sometimes a reality check can cause a stock to boom as well. Say a company that wasn't getting noticed but was doing things that were good for the company, finally gets noticed so the price shoots up.
Re: (Score:3)
however someone who feels that Traditional Automakers will kill Tesla once they go electric may panic and sell off their stock
Except Tesla has apparently already survived numerous "Tesla killers".
Re: (Score:3)
Re:Worth (Score:5, Insightful)
To some degree stock markets can behave irrationally in the short term. In the long term that tends to smooth out. What investors are seeing is a company well placed to lead the EV market. Value isn't just the assets, cash in the bank and receivables; it's good will and projections of future growth, and Tesla seems well positioned to be one of the major, if not the major player in EV and battery technology. It might very well be the largest auto manufacturer in the world in a couple of decades.
Re: (Score:2)
To some degree stock markets can behave irrationally in the short term. In the long term that tends to smooth out.
Not since about 25 years ago. The sky's the only limit these days.
Re:Worth (Score:4, Interesting)
The market will always self correct, as the Dot Com boom demonstrated ably, and rather concisely. But Tesla at this point is hardly some flash in the pan that's just soaking up investor money. It's actually producing tangible products. We can dicker about whether half a trillion is a reasonable valuation, but I suspect, all things considered, it's hardly far off. If I was an investor (which I'm not these days), I'd probably think while it is somewhat inflated, it's probably not that inaccurate.
And stock markets have been overvalued many times since they were invented. Sometimes the corrections are modest, and only a few people lose their shirts, and sometimes they're wildly out to lunch, and lots of people lose their investments. It's not something new, though the tools being used these days are different in fundamental ways. After all, major stock market collapses like the South Sea Bubble and Black Tuesday have happened, and will happen again.
Re: (Score:2)
IIRC the dotcom boom was based on thin air (remember Internet "portals"? LOL!)
The big companies these days have actual products, as you point out.
S&P 500 (Score:5, Informative)
To some degree stock markets can behave irrationally in the short term. In the long term that tends to smooth out. What investors are seeing is a company well placed to lead the EV market. Value isn't just the assets, cash in the bank and receivables; it's good will and projections of future growth, and Tesla seems well positioned to be one of the major, if not the major player in EV and battery technology. It might very well be the largest auto manufacturer in the world in a couple of decades.
Amen brother. Anyone with an ounce of rational analysis saw that years ago.
As to the current bump:
Tesla was recently added to the S&P 500, which means a bunch of mutual funds that index off of the S&P will be looking to add Tesla to their portfolios.
No one knows how much Tesla stock will be needed, or how much it will be in demand, but I've seen one estimate of 8% of the total stock of Tesla. Much of Tesla is held in big blocks by individual owners (such as Elon Musk), so there might not be 8% available for purchase right now(*).
That's a recipe for a short squeeze, I think a lot of individual owners know this, and many people are holding onto their shares hoping to drive the price up.
That's the current bump. As to the outlook, Tesla stock is moved by events and the following events are upcoming: Berlin factory comes online, Texas gigafactory comes online, quarterly results, annual results, shipping first Tesla truck, shipping first Tesla semi. All of these will happen in the next calendar year.
If any of these events crash and burn, or show negative growth (ex: annual production of cars) then the stock will take a hit. Otherwise, for each of theupcoming events expect Tesla to get bumped up even higher.
(*) I'm wildly uncertain about these numbers, so fact checks are welcome.
Re: (Score:3)
I agree that Tesla is a good company with some great prospects. However, the finance wizards have recently decided it's a software company (not kidding, there was an article the other day right here). Finance wizards don't seem to understand that there's a difference between software companies that earn money by copying bytes, and "software companies" that earn money by handling physical products that happen to have some software in them.
It's a software company AND a car company ! (Score:2)
Re:Worth (Score:5, Interesting)
Re: (Score:2)
The valuation likely takes into account the growing EV market, and Tesla's new facilities and capability of much more quickly ramping up as growth increases. Again, we can quibble about the dollar value, but Tesla is in a helluva lot better place than its competitors.
Re:Worth (Score:4, Interesting)
also, I'd consider Tesla more a battery and battery technology company than a car manufacturer. The cars are a great way to create their own market, like when GM created bus systems to sell to them . . .
Re: (Score:2)
I'd consider it to be like any automanufacturer; an ecosystem of independent but related R&D departments. Battery development is obviously critical to EVs, but the drivetrain is no less key, not to mention the embedded systems that monitor these subsystems. It's not really all that different as to how conventional ICE vehicles have evolved. The one thing any EV manufacturer has on their side is that the drivetrain of an EV is far simpler than an ICE drivetrain. Simplicity makes manufacturing and assembl
Telsa is not the biggest li-ion battery maker (Score:2)
By far. It is number 5, way behind LG Chem.
https://seekingalpha.com/artic... [seekingalpha.com]
I don't think they are the biggest electric car manufacturers either. I think BYD (China) is much bigger. And the Nissan Leaf has sold many more cars, although that may change.
They may have the best self driving software at the moment, but not by much.
They will probably do OK. They will almost certainly not take over all automotive manufacturing world-wide.
That said, I am glad I did not short their overvalued stock last year!
Re: (Score:3)
I used to believe that amazon was overvalued . . . at a rather small fraction of the current price.
The anticipated future growth is an integral part of the price of a stock.
High valuations on a stock in a new area are not, on their own, irrational. They include a bet that *that* company will be the "amazon" for its niche. Some of these pay off, such as amazon, and most don't
Even with multiple players, they can all have this factored in.
What *is* irrational is when the market cap of *all* of the contestant
Re: (Score:2)
Apple is valued higher than Microsoft, Dell, Samsung and IBM combined. Why? They have an amazing marketing department, a mediocre non-standard cellphone, and less than 7% of the PC/laptop market (and 0% of the server and cloud markets). The stock market has essentially no relationship to reality and hasn't for many years.
You're underestimating the tipping point (Score:3)
Government policy needs to pick up the pace to become compatible with the science.
Markets (and demand) should follow suite.
Besides, EVs will be way more cost effective (and high performance) than ICE vehicles within 5 years.
Elon is modelling Tesla growth plan based on these factors, and it would surprise me slightly if Tesla is not the largest auto & truck manufact
Re:Worth (Score:5, Insightful)
With almost every topic dealing with economics, there's always posters showing the whole world that they understand nothing about economics. And of course, people just as ignorant as them modding their post +5 insightful.
Things are worth precisely what some people value them. That's how economics work.
Re: (Score:3, Insightful)
Loss (Score:2)
Tulip bulbs worth precisely what some people willing to pay for them.
Ironic that the losses of Tulip Bulb Speculators now look minuscule next to the losses from Salty Tesla Shorts.
Re: (Score:3, Insightful)
Re:Worth (Score:4, Informative)
Saying something is worth something implies that it could be sold at that price, and you can't sell the entirety of Tesla for $515bn. Now turnover for Tesla is very high, so there is more of a chance you could get something close to that than another company where volumes are lower.
I don't know stocks much, but there are 950M tesla shares and the average daily volume is 50M, so it'd take just 19 days at current rates to sell the entirety of Tesla for $515bn.
I presume lots of that volume must come from trading algorithms, hence the same entity selling and buying and selling again. You might have intended a different statement, "you can't permanently transfer ownership of the entirety of Tesla for $515bn to someone else". I don't know how to gauge that.
Re:Worth (Score:4, Interesting)
Well, that's not the whole picture. Price is determined by supply and demand. People have a common vernacular understanding of what these 3 terms mean: price, supply, and demand.
To Joe Sixpack, price is what you pay. Supply is how much stuff there is, and demand is how much people want it. Joe sort of has an understanding of how the 3 relate, but it's different from economic theory.
To an economist, price is a number determined by where a supply curve and a demand curve intersect.
The misunderstanding comes when Joe Sixpack thinks things like, "the supply of gold is limited, so it has to go up". The economists know better. They know that the price isn't determined entirely by the scarcity of something. It's determined by the intersection of *two* curves, the supply and demand curves.
That's all just theory too--a tool that everybody should know is likely to be out of step with the real world in some way. Even physics doesn't have a complete theory, much less economics. Some economists have actually expressed shock that the "rational actor" assumption in their theories didn't hold true in the real world. Joe Sixpack would have told them that people aren't rational.
The truth is usually somewhere between Joe Six' and the Ivory Tower.
Even economists don't really understand economics. Nobody does.
Re:Worth (Score:4, Informative)
Some economists have actually expressed shock that the "rational actor" assumption in their theories didn't hold true in the real world. Joe Sixpack would have told them that people aren't rational.
The truth is usually somewhere between Joe Six' and the Ivory Tower.
If there's one thing I learned form my political science degree it's this: never rely on people to be rational. That's not to say that people aren't rational. They are. But the problem is rationality is person and circumstance specific. What is rational to me may not be rational to you. Change 1 little factor and something that is rational for me today is irrational tomorrow. To make matters worse, not only is rationality fluid, but it is also influenceable; people can be convinced or coerced into perceiving a certain course of action is rational when, to an outside observer, they seem to be working against their self interest.
Re: (Score:2)
However, there's only a very small minority of market agents "voting" on the market price, compared to all people with money.
The implication is, Tesla cannot sell all its stock at market prices, unless there is insane volume and large institutional buyers (Blackrock etc) estimate it to be fairly valued. But you'd need 30 Blackrocks to absorb all of Tesla's stock, to say nothing of the tech titans. So, even if the intention to buy were there, the capital ain't. What does that
Re: (Score:2)
But I want an "expert" to tell me where I can put my money to get Rich Quick without a lot of work.
Re: (Score:3)
To be fair, nobody really understands economics!
Re: (Score:2)
I'm tired of this circular reasoning.
Re: (Score:3)
Some people value Tesla that high, it doesn't mean its actually worth that much.
That is how the stock market works, yes.
Re: (Score:2)
nope, small percentage sold in short time would cause "worth" to plummet. The stock can't be sold for half a trillion. That stock can't be sold for half a trillion. Instead, the price per share represents the H's of hope, hyped and hooey, not actual worth. A market cap is detached from true worth.
Re: Worth (Score:2)
Thatâ(TM)s how markets work. Things are worth what people are willing to pay for them.
Re:Worth (Score:4, Insightful)
I see part of the problem, is most of the other companies, are just bunkerring in and working on what works with their business models. Including once darlings like Apple, Facebook and Google. Tesla is one of the few companies that seems to be positioned to change the industry. So for people who want to be on the ground floor it is a good place to be.
Tesla isn't a perfect Car Company. They have many details to work out, especially around build quality, but we can see what happends with the factories being built and some are starting car production in China, Germany, and Texas. (Where there is reports of better build quality in the China) because of the new Stamps.
The California factory was an old Toyota factory, so it has issues that new factories do not have. But there are other issues that you cannot blame the factory on, but on management of the workforce to make sure the quality is up.
Tesla will need to have a higher standard (even higher than traditional automakers) of the cars that leave the factory. Because they don't have dealers, as the dealers will often fix many of the Fit and Finish issues before they sell them on the lot.
However Tesla built a company to sell Good Electric Cars, that are also Good cars in general. Unlike many other automakers who Made Electric Cars just to meet some sort of regulation, they made them as a toy so they can show that they cannot compete. So countries with stronger Environmental laws are buying them, people who just want fast cars are getting them too.
Re: (Score:2)
The value of an investment asset is a function of two factors: expected future revenue and expected future risk. That's why the treasury can sell T-bills that pay something like 0.2%, and people will actually buy them.
Now some stocks, say Proctor and Gamble, are based on very mature, predictable businesses. There's very little disagreement on where the soap market is going in the next few years. But the value of a stock like Tesla is inherently a matter of opinion. Sure, there objective things you can me
Re: (Score:3)
The question is whether Tesla will be able to compete with other automakers as they inevitably start to catch up.
And that boils down to your opinions of one man: Elon Musk. He is a visionary....
And many years ago he went on record saying that he didn't want to start an electric car company, but he figured it would be the only way to drag the existing vehicle manufacturers towards electrification. He believes that's the way you solve climate change.
His entire point wasn't to compete and make billions, it was to force the hands of the existing companies. It was to force them to catch up. He wanted to make them jump a decade ahead.
And he's delivered on that. He may be a loose cannon who puts himself
Nissen leaf (Score:2)
Started selling large numbers long before Tesla did. As did BYD (China).
Re: (Score:2)
I really don't think that anybody values Tesla the company that high.
Being very generous as to what I think their position two years from now will be, I'd value them in the $50 billion neighborhood today. I think they will see a 5-year future higher than that and a 10-year future much higher. But, Tesla the stock is currently priced for where they may be in 15-20 years assuming continued execution.
I doubt most are investing in Tesla the company. Tesla the stock is a thing of its own that has achieved fairly
Re: (Score:2)
Re:Worth (Score:5, Funny)
In other news, another Tesla loses its roof due to their shit build quality.
The stock is blowing up so fast it's literally shooting through the roof!
Re: (Score:2)
That's because those morons keep storing their shares in their Tesla's glove box.
Re:Worth (Score:4, Informative)
Let me guess you jumped onto the Short Seller bandwagon. Short Selling in general is a poor investment strategy, as for the most part Stocks will go up. Pointing out some occurrences of Tesla that had failed build quality, isn't a big enough problem to affect the stock in any long term manor.
Re:Worth (Score:5, Insightful)
If quality control problems was an issue for auto manufacturers, they would have all disappeared decades ago. Picking Tesla out of the pack because of some manufacturing and recall issues while not pointing out that every other single auto manufacturer out there has similar issues seems a tad bit one sided, and more than a little suspicious.
Re: (Score:2)
Indeed. GM has been fighting a 6 million vehicle recall for years, and finally lost that battle.
I'm pretty sure that Tesla hasn't had to recall 6 million cars because the roofs might fly off. And that's arguably a less serious issue than an airbag deployer shot-gunning you in the face as you drive down the road.
Re: (Score:2)
https://www.cars.com/research/... [cars.com]
Recall number
06v181000
Recall date
05/24/2006
Component
Structure:body:roof and pillars
Summary
On certain 2005-2006 chevrolet corvettes equipped with painted roofs, the adhesive between the roof panel and the frame may separate.
Consequence
If there is a complete separation, the roof panel may detach from the vehicle and it could strike another vehicle and cause injury and property damage.
What owners should do
Dealers will inspect vehicles free of charge for potential roof panel-to-
Re: Worth (Score:2)
Tesla isn't an auto manufacturing company.
Jesus Christ, they produce cars to get people to use their infrastructure, not the other way around.
Re:Worth (Score:5, Informative)
then charging a subscription fee on top of that to drive it,
Exactly what subscription fee are you talking about?
I bought a Model Y last July and I pay insurance every month. I also pay $9.99 for one year of enhanced cell network service which is optional. I pay for electricity to fuel it. If something breaks in warranty they fix it. If I break something I pay for that.
There is no "subscription fee to drive it."
Re: (Score:2)
Exactly what subscription fee are you talking about?
This may be related to some crazy talk I've seen someone else here on /. going on about, which is this idea that Tesla has the ability or does "remote kills" on Tesla vehicles. This functionality exists in other vehicles and through different technologies, so I don't see why Tesla couldn't have it. But its sounding like the anti-Tesla crowd has gotten themselves into a tizzy with conspiracy ideas that Tesla will be going around and shutting off/killing Teslas for "reasons."
Subscription fee for full self driving (Score:2)
Also, there are plans and probably Tesla-internal skunkworks project to do with offering an Uber-like service but where people loan out their self-driving cars for use as "ubers". The car owners would have to pay a subscription and/or percentage of car rental revenue to Tesla for operating the network/service.
And Bitcoin is at it's all time high again (Score:2)
It's All About Keeping Score (Score:2)
> Only Amazon's Jeff Bezos stands in his way to becoming the world's wealthiest person.
It's a Battle of the Bastards. You expect what else in the upper reaches of the rich? Note also that it's funny money. The 1/2 trillion$ is market cap - #shares issued * share price on the market. It has no direct relationship to the fundamentals of the company.
Re: (Score:2, Troll)
on one hand you have a man who's business is about gutting local economies and further concentrating wealth
on the other you have electric cars, colonization of mars, fast global satellite internet, cheaper satellite launches, solar power etc etc
in their personal lives i'm sure both are bastards to the extreme (i think you somewhat have to be a bastard to become that wealthy); but humanity benefits a bit more from musk's activities than bezos'.
Re: (Score:2)
I enjoyed that episode [imdb.com], aside from some quibbles about the realism of medieval battle tactics.
Question though: which one of them will end up being fed to his ravenous dogs?
And ti's still losing money (Score:2, Insightful)
Contrary to what people think, Tesla has not turned a real profit in its entire existence. That "profit" people see from the previous quarter is strictly the result of trading carbon credits, not from money being made on vehicles.
Without those credits, Tesla would continue its nearly two decades long losing streak of making money. And this doesn't take into consideration the billions in other subsidies it's received over that same time.
As others have said, the valuation is what people believe the company
Re: (Score:3)
[citation needed]
But even if your premise is correct, much the same could be said for the Playstation. They are selling something at a loss, but getting bank on some future side product. Meanwhile, their sales volumes allow them to 1) get market penetration, and 2) gain economies of scale and climb the learning curve more rapidly, such that eventually they can tur
Re: (Score:3)
[citation needed] But even if your premise is correct, much the same could be said for the Playstation. They are selling something at a loss, but getting bank on some future side product. Meanwhile, their sales volumes allow them to 1) get market penetration, and 2) gain economies of scale and climb the learning curve more rapidly, such that eventually they can turn a profit on the hardware itself. And even setting that aside: so what if all their profit comes from carbon credits, rather than on their vehicles? It is profit on something real and not merely accounting. If the credits disappeared tomorrow and Tesla was no longer profitable, there are probably still plenty of people willing to front it capital in the markets. Are you harmed?
This [cnbc.com] is an interesting read on the subject. They wouldn't have been profitable without the sale of carbon credits, but then again they wouldn't have been profitable without selling cars either.
It's great that they're able to capitalize on this benefit from selling only ZEVs. Sell cars to people (and profit a little), sell carbon credits to other auto manufacturers that haven't bothered to make their lineups efficient enough (and profit more).
Their projections are that carbon credit sales will remain stro
Re: (Score:3)
You can probably say the same about most of the old car companies too. They make most of their money from loaning people money to buy cars.
Re: (Score:3)
Is that what you tell yourself when it's late at night and the demons come? Fine, dude, you're not a miserable failure, it's just that all the other guys are cheating.
Would oil companies be profitable without subsidies? What if we taxed oil based on its actual externalized costs (wars, health effects, global warming)?
Would the other car companies be profitable without the occasional government bailout? what
Re: (Score:2)
It all boils down to some hyperskepticism about Tesla, which seems to put the company under a level of scrutiny I don't see anyone putting GM, Ford, Toyota are any of the other auto manufacturers under. I get that Musk is a pretty unconventional guy, and Tesla, in some ways, has been a bit unconventional, and that certainly makes one shake ones head. But Tesla is clearly an EV leader, and clearly well positioned, I'd say better positioned, than the other auto manufacturers, to feed into a market that just a
Re: (Score:2)
That statement is not true. You can't just lop the income from tax credits off the bottom line and declare that there was no profit: if you remove the tax credits, you also have to remove the tax that was paid on the profit from tax credits. In at least one quarter, that leaves Te
Re:And ti's not losing money (Score:2)
Contrary to what people think, Tesla has not turned a real profit in its entire existence. That "profit" people see from the previous quarter is strictly the result of trading carbon credits, not from money being made on vehicles.
Without those credits, Tesla would continue its nearly two decades long losing streak of making money.
It's a real profit according to the rules of accounting. They're a publicly traded, audited company. Their profit for the last year is quite real.
Looking at how finely balanced it is, it's quite obviously intentionally just barely profitable on the back of those carbon credits. A fine bit of corporate accounting on the part of their CFO to make the numbers balance out while they expend absolutely massive amounts of capital building three factories simultaneously on three different continents. It was not
Re: (Score:2)
Re: (Score:2)
How do those grapes taste by the way?
I'm thinking "sour".
In two years, Spacex will be worth more (Score:2)
No other launch providers have anything that will be close to competing with Starship on the price of putting tons in orbit.
TSLA mkt cap is more than ALL other autos COMBINED (Score:2)
Without any major crash in the mkt. cap of all the other auto companies. This is patently ridiculous and can in no way be justified by the fundamentals of the auto business. Maybe, eventually, Tesla will rival Toyota in number of autos sold, revenue, profit, etc., but that won't happen any time soon. I'd be amazed if Tesla gets close to Toyota's scale within a decade.
You can't justify Tesla's market cap based on its (future) auto business alone. So, what about its other businesses: battery tech + production
Re: (Score:3)
Oh, I forgot to mention that Tesla's Price / Earnings ratio is over 1,000 now. Normal stocks have P/E ratios usually in the 10 - 40 range.
You can counter that everyone is pricing in enormous expected earnings growth in the future. But the only way Tesla cranks out more profits in its auto business is by cranking out more autos, which is hard and expensive to do (unlike software or even electronics). So, the only thing I could possibly see is if their battery business is expected to absolutely explode and th
Re: (Score:3)
You do understand stock markets have been around in one form or another since the Venetians effectively invented the modern banking and credit system, right? That's like saying "Any day now, the pyramids will turn to dust!"
Re: (Score:2)
So have insects, but I'm pretty sure that if we look at individual species of insects we'd find all kind that have gone extinct. I'm not fully buying into the Ponzi idea, but your counter isn't 100% either here.
Re: (Score:3)
Some early stocks were effectively Ponzi schemes, and it's largely because of the bad actors that most countries put significant regulation in place. It isn't perfect (but then again, what is). The worst things that happen now are that governments have to intervene, but that's usually because the banking system itself becomes threatened. No one has much appetite to bail out investors if they lose their shirts due to bad investments or unforeseen crises. The primary objective is to make sure the whole system
Re:To whom? (Score:5, Insightful)
Tesla is basically using Stock as it was intended to be use for.
Tesla Sells Stock, they get money for the stock. They use the money collected to expand the business so they can produce more. They are building 3 Large Factories at the moment, their products are in High Demand. They also have an extensive R&D department coming up with new Battery Chemistry as well new Manufacturing methods.
This is really Old School Economy stuff.
Re: (Score:3, Insightful)
Bit of a facile remark. Companies are worth whatever anyone is willing to pay for them.
If somebody wanted to buy a majority holding, they would have to offer an amount in excess of the current price to persuade enough people to sell. This scenario has played itself out with thousands of companies over the years.
Your scenario, where everybody simultaneously tries to sell their stock despite there being no bad news about the company, is a nonsensical academic exercise. Give me one example of when this has hap
Re: (Score:2, Insightful)
Re: (Score:2)
When large corporations are swallowed up whole, it's usually because a larger concern is buying them up. In that case, the buyer is either buying up a company that is in some sort of crisis and probably will buy the company for a fraction of the stock value, but generally, if you have a reasonably healthy company, it's usually going to involve incentivizing the purchase by offering to pay shareholders more than the valuation of their shares.
As it is, no one is buying Tesla, they're buying stock. In other wo
Re: (Score:2)
Re: (Score:2)
Can you define "worth" here? The simplest definition I know of is the equity of a company, but that's a point in time determination. Valuations take a lot more into account than the state of the balance sheet at a particular point in time, there's also projections of demand, how readily a company can fulfill that demand (supply). So growth is a big part of a valuation, and that is inherently speculative, and yet, for instance, if a company were to be sold, as in a whole stock sale (the usual way at least sm
Re: (Score:2)
Re: (Score:2)
A single person? No.
Tens of thousands of people who all want a slice? Yes.
And if you add up the value those tens of thousands of people are willing to pay for those collective slices, it adds up to a half trillion dollars.
Now that you have learned how the stock market works, is there anything else we can teach you?
Re: (Score:2)
Re: (Score:2)
Martin Molin says you're in a good place right now. Keep up the good work!
Re: (Score:2)
Re: (Score:2)
You're close, but not quite there.
If you wanted to buy Tesla, who would you buy it from?
If it was a private company, owned by Musk, it would be him. And maybe you could pay him a bit over the price of "the actual cost of the company" and he'd sell it. But the problem is that it's not him that owns it now.
Who owns it? Everyone who owns stock in it. Thus the "actual cost of the company" is the price the owners set for it. And that's the market capitalization.
It doesn't make sense to argue that that's not the
Re: (Score:2)
Re: (Score:2)
Re: (Score:3)
For it to be worth half a trillion dollars, you'd have to be able to sell it for that. If everyone wanted to sell all their stock in Tesla, the share price would go down as sales happened.
Yes, but that won't happen.
Right now: Tesla stock is an investment and the price of entry is half a trillion dollars.
Re: (Score:2)
Re: (Score:2)
It is according to Donald Trump.
His measure of "the economy" is Wall Street.
Re: (Score:2)
Define "worth"?
Something is worth what someone else is willing to pay for it.
Market cap is not worth.
Yes it is.
If you think otherwise, feel free to short Tesla. Then when you cash out, you can come back here and post a photo of your yacht.
Re: (Score:2)
Define "worth"?
Something is worth what someone else is willing to pay for it.
Market cap is not worth.
Yes it is.
That is how YOU define worth. I define it as book value per share. Right now, infinite growth with no competition is built into Tesla share price. IOWs, irrational exuberance.
If you think otherwise, feel free to short Tesla. Then when you cash out, you can come back here and post a photo of your yacht.
To short, you need the capital - there are strict rules to shorting stock. So even if someone could time it perfectly, if they do not have the capital, there is no yacht for them.
Regardless, I am just sitting back and everyone who is making money on Tesla and its crazy cult - I congratulate them as I would someone who won the lottery
Re: (Score:2)