Who else feels like the TSLA price is a gigantic bubble at this point? Not that it's not valuable or worthy of some of the growth it's seen, but almost 10x in one year looks like a classic bubble to me.
LE: Also, I don't really understand how people keep falling for this stuff. I have no doubt that some are very well aware that it's a bubble and just think they can time the crash correctly, but I see _a lot_ of people with incredibly bullish views on this. And to be honest, it's the same with Bitcoin.
The fascinating thing to me is that if you bring Tesla valuation up the response is "lol dumb short seller, prepare to lose another X billion this year!".
Tesla's most valuable product definitely isn't anything made in a factory or produced by their programmers, it's the financial cult that has amassed around it. It's people who are putting every penny of their money on Tesla calls and spending every hour of their day making sure to spread the good news of Tesla and metaphorically stoning anyone who dares speak against Elon Musk.
This will almost certainly not end well at some point, especially since the valuation exceeds even a scenario where Tesla becomes a global monopoly in a number of industries. How long will it take for the cult to realize this? Maybe never.
> Who else feels like the TSLA price is a gigantic bubble at this point? Not that it's not valuable or worthy of some of the growth it's seen, but
It's a classic "there will be a greater fool down the road" theory, like the tech companies that proclaim they will never issue a dividend (in which case the only reason for buying the stock is that you believe someone else will buy it later).
The correction will be painful for all concerned. An overlarge market cap isn't really that great. Sure, for a while you can raise capital extremely cheaply and that's nothing to sneer at! But it leaves a couple of problems: when it's big it's harder for it to grow, while a smaller mkt cap leaves more room for growth. And people are buying growth. The other problem is that it traps the leadership. 20 years ago when Time Warner bought AoL there was much discussion in the press about the various business logic/synergies (or lack thereof) between the two businesses. But really the primary motivation seemed much simpler: the only way that Steve Case could retire (without cratering the stock price) was to sell/merge the company into another entity of at least similar size. Tesla can't merge with any car company, or many other companies for that matter.
As for the shorts:
A couple of years ago my kid worked for a billionaire with whom he remains friendly. The other day he joked to me, "My greatest respect for XXX is that he is the only person I know who has made money shorting Tesla"
We are going to live in a low rate world for a long, long time. Cheap money means time horizons get expanded. This is the perfect environment for "moonshot" stocks because investors don't care if you say it'll take 8 years to make your first dollar (looking at you, QuantumScape)
The craziest thing is that TSLA was in an anti-bubble just 2 years ago, with the price clearly suppressed far below a reasonable valuation. Now it's even farther from reasonable. Something about TSLA just makes people lose their minds in both directions.
> Who else feels like the TSLA price is a gigantic bubble at this point?
It's close to being a TRILLION dollar company. Think about it. It's so mindboggling. But then again, I felt that amazon was a gigantic bubble forever too.
I've said it before and I'll say it again: at this point tesla is going to be spectacular one way or another. It's been bid up to such an extreme degree that it can't tread water. So in 2030, we'll look back and be amazed at what Tesla has become no matter what.
I really wish they would stop this reporting of who is the richest. It is lazy reporting and just recalculates by the minute based on stock values.
I'd rather see who has the highest liquidity. Who is holding on to cash they could, right this minute, spend, or stocks they could freely sell without tanking their own companies? Not Musk, not Zuck, not Jeff... at least, not likely.
These people can personally borrow large amounts at such low interest that it’s effectively cash (if not 0% altogether) because a bank will value its relationship to these people that high (because they’re probably also the corporate bank for these companies).
I also think you’re extremely underestimating just how big these companies are. Jeff is liquidating ~1 billion a year just to fund his space company. Zuckerberg sold $280 million in 1 month in 2020 for walking around money.
No they can’t liquidate their entire position. They do have effectively almost unlimited financial reserves through multiple different channels. Said another way, they have $10s of billions in buying power even if they can’t access that entire wealth instantly as cash.
I agree with this. There's no way Musk or Bezos could liquidate all their shares and retain that value.
Best way to be worth $1m. Create a company with an idea, find an investor and sell 1% for $10,000 and on paper you're worth $990,000. That money doesn't exist, just the $10,000.
I always liked Felix Dennis' metric that he said in his book about "lifetime spending totals". Which he claimed he won at (hundreds of millions) with the amount he spent on crack, wine, and hookers. Good times.
It's not lazy, it's highly interesting and people obviously love hearing about it, given how popular these stories are. Why care about liquidity? All of these hundred-billionaires can buy whatever they want anyway.
I'm been an avid comics fan all my life. I remember "millionaire Bruce Wayne" giving way to "billionaire Bruce Wayne", and idly wondering how long before we'd see the first reference to "trillionaire Bruce Wayne".
Good for Elon. He put his own money into Tesla keeping it from going under and still holds 20% never selling any shares. He’s even complained in the past that Tesla stock was too high. His significant ownership of SpaceX also helps. Disclaimer, I’m a Tesla shareholder and could retire today off my gains.
Not just never selling shares. Convincing the other shareholders to gift him 55bn of their shares as annual salary. Smart but not repeatable infinitely, sooner or later some of you will button on that you are being fleeced. (So sell now and retire, or regret it later.)
By nearly every conventional metric, TSLA is overvalued even in comparison to a market that may or may not be also overvalued.
Although, Elon's net worth is the highest, it's nearly all in TSLA stock of which Elon has about ~20% of all shares. If he sold or made this asset liquid, it would decrease his power in his own company. Considering Elon's methods and behavior can be unconventional to say the least, he probably needs to keep as much power as possible.
TSLA has a P/E ratio of 1500. Even though they're a growth stock it's a generous valuation to say the least. The stock price has been driven up by
(1) a lot of retail investors loading into the stock & call options, primarily because it's a momentum hype/meme ticker with Elon at the helm, and easy access through Robinhood et al combined with stimulus money.
(2) large cap tech stocks have been rallying during COVID; capital has had nowhere else to go with the Fed crushing the USD and non-tech companies suffering,
(3) shorts have been repeatedly obliterated and are now mostly staying away. Short interest is now only 6%.
(4) TSLA was recently included in the S&P 500 at a ~1.5% weight, so index funds and ETFs have been forced to buy it due to a mandate to track the index.
Congrats to Elon for finally learning from the Steve Jobs handbook. Make a cult of your followers, and they will literally take in everything you throw at them.
I cannot describe how many times I have heard the infamous "iT'S mOrE tHaN a cAr cOmPaNy"... All bark no bite, they sure as hell are not a major car company since they didn't manage to even deliver 500 000 vehicles this year ( "almost" 500 is not 500, especially since you have been promising 500 000 delivered cars for the last 6 years).
Still waiting to see how their "revolutionary" battery technology is going to look like, SolarCity was almost bankrupt, which is the reason Tesla had to buy them to save Elon's cousins...
They do got a shot at driverless technology, but the question is how big of a market is that, and how much are they going to own..
Waymo is also a danger in that field...
This is the same playbook amazon did - give investors a vision, convince them short term profit are less important than the eventual goal. Get the capital at a really really low cost, and then use these capital to build hard things, and crush competition.
Whats the path that Tesla crushes the competition though? Seems like existing competition can ride the coattails if anything. Only way to stop it would be to engage in some incredibly anti-competitive behavior.
No doubt Tesla is worth a lot. The question is when. As of right now I always have had the thought that they can’t get past their manufacturing problems.
It is a habit now to think this. Not sure if it is still valid.
Manufacturing is only half of it. The maintenance back side and parts market is all messed up too. So you not only have a car with some manufacturing issues, but you can't get parts or tools to fix those issues. Then there is the problem with Tesla remotely disabling features after resale.
This isn't exclusive to Tesla either. I'm really hating this trend towards "Unauthorized Bread" in the automotive sector.
The value of TSLA arises from having RL Tony Stark behind vs faceless commoditized brands (VW, BMW, etc.). It's the Apple of cars and that's invaluable.
Question:
How did elon maintain his share in Tesla during the finance rounds? He was not a cofounder. During the years, he did not have other significant sources of income. And Tesla has been capital hungry for a long time.
I am quite interested in his techniques, and am guessing so do a lot of founder wannabes.
Why I find those types of comparisons unreal? Because objectively speaking there are a lot of families with well-hidden wealth that can make Bezos or Musk fortunes look like pocket change. It's common sense.
competition aside, do you think that Tesla will hold the same valuation if Elon Musk leaves or dies? If you think Tesla valuation is just Elon hype, that's just a huge risk by itself.
Regardless of if they're good or bad people: Gates made sense, Buffett made sense, Bezos made sense.. Musk, I simply don't get how his achievements (as significant as they are) add up to this outcome.
[+] [-] rocgf|5 years ago|reply
LE: Also, I don't really understand how people keep falling for this stuff. I have no doubt that some are very well aware that it's a bubble and just think they can time the crash correctly, but I see _a lot_ of people with incredibly bullish views on this. And to be honest, it's the same with Bitcoin.
[+] [-] tenpies|5 years ago|reply
Tesla's most valuable product definitely isn't anything made in a factory or produced by their programmers, it's the financial cult that has amassed around it. It's people who are putting every penny of their money on Tesla calls and spending every hour of their day making sure to spread the good news of Tesla and metaphorically stoning anyone who dares speak against Elon Musk.
This will almost certainly not end well at some point, especially since the valuation exceeds even a scenario where Tesla becomes a global monopoly in a number of industries. How long will it take for the cult to realize this? Maybe never.
[+] [-] gumby|5 years ago|reply
It's a classic "there will be a greater fool down the road" theory, like the tech companies that proclaim they will never issue a dividend (in which case the only reason for buying the stock is that you believe someone else will buy it later).
The correction will be painful for all concerned. An overlarge market cap isn't really that great. Sure, for a while you can raise capital extremely cheaply and that's nothing to sneer at! But it leaves a couple of problems: when it's big it's harder for it to grow, while a smaller mkt cap leaves more room for growth. And people are buying growth. The other problem is that it traps the leadership. 20 years ago when Time Warner bought AoL there was much discussion in the press about the various business logic/synergies (or lack thereof) between the two businesses. But really the primary motivation seemed much simpler: the only way that Steve Case could retire (without cratering the stock price) was to sell/merge the company into another entity of at least similar size. Tesla can't merge with any car company, or many other companies for that matter.
As for the shorts:
A couple of years ago my kid worked for a billionaire with whom he remains friendly. The other day he joked to me, "My greatest respect for XXX is that he is the only person I know who has made money shorting Tesla"
[+] [-] tim333|5 years ago|reply
[+] [-] tempsy|5 years ago|reply
[+] [-] samfisher83|5 years ago|reply
[+] [-] modeless|5 years ago|reply
[+] [-] unknown|5 years ago|reply
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[+] [-] disown|5 years ago|reply
It's close to being a TRILLION dollar company. Think about it. It's so mindboggling. But then again, I felt that amazon was a gigantic bubble forever too.
I've said it before and I'll say it again: at this point tesla is going to be spectacular one way or another. It's been bid up to such an extreme degree that it can't tread water. So in 2030, we'll look back and be amazed at what Tesla has become no matter what.
[+] [-] fullshark|5 years ago|reply
[+] [-] bookmarkable|5 years ago|reply
I'd rather see who has the highest liquidity. Who is holding on to cash they could, right this minute, spend, or stocks they could freely sell without tanking their own companies? Not Musk, not Zuck, not Jeff... at least, not likely.
[+] [-] vlovich123|5 years ago|reply
I also think you’re extremely underestimating just how big these companies are. Jeff is liquidating ~1 billion a year just to fund his space company. Zuckerberg sold $280 million in 1 month in 2020 for walking around money.
No they can’t liquidate their entire position. They do have effectively almost unlimited financial reserves through multiple different channels. Said another way, they have $10s of billions in buying power even if they can’t access that entire wealth instantly as cash.
[+] [-] rvz|5 years ago|reply
> I'd rather see who has the highest liquidity.
That would be interesting.
[+] [-] martin-adams|5 years ago|reply
Best way to be worth $1m. Create a company with an idea, find an investor and sell 1% for $10,000 and on paper you're worth $990,000. That money doesn't exist, just the $10,000.
[+] [-] imglorp|5 years ago|reply
https://foreignpolicyi.org/vladimir-putins-net-worth/
[+] [-] zpeti|5 years ago|reply
[+] [-] bidirectional|5 years ago|reply
[+] [-] iMark|5 years ago|reply
It seemed impossibly distant once. Not now.
[+] [-] stickyricky|5 years ago|reply
[+] [-] pokerhobo|5 years ago|reply
[+] [-] MagnumOpus|5 years ago|reply
[+] [-] apta_|5 years ago|reply
[+] [-] melling|5 years ago|reply
Hopefully he starts some other futuristic project...or two.
However, I do wonder if this isn’t a sign that the market is overvalued. How does it look historically?
[+] [-] KingMachiavelli|5 years ago|reply
Although, Elon's net worth is the highest, it's nearly all in TSLA stock of which Elon has about ~20% of all shares. If he sold or made this asset liquid, it would decrease his power in his own company. Considering Elon's methods and behavior can be unconventional to say the least, he probably needs to keep as much power as possible.
[+] [-] WannaFly|5 years ago|reply
[+] [-] hndudette2|5 years ago|reply
(1) a lot of retail investors loading into the stock & call options, primarily because it's a momentum hype/meme ticker with Elon at the helm, and easy access through Robinhood et al combined with stimulus money.
(2) large cap tech stocks have been rallying during COVID; capital has had nowhere else to go with the Fed crushing the USD and non-tech companies suffering,
(3) shorts have been repeatedly obliterated and are now mostly staying away. Short interest is now only 6%.
(4) TSLA was recently included in the S&P 500 at a ~1.5% weight, so index funds and ETFs have been forced to buy it due to a mandate to track the index.
[+] [-] newbie578|5 years ago|reply
I cannot describe how many times I have heard the infamous "iT'S mOrE tHaN a cAr cOmPaNy"... All bark no bite, they sure as hell are not a major car company since they didn't manage to even deliver 500 000 vehicles this year ( "almost" 500 is not 500, especially since you have been promising 500 000 delivered cars for the last 6 years).
Still waiting to see how their "revolutionary" battery technology is going to look like, SolarCity was almost bankrupt, which is the reason Tesla had to buy them to save Elon's cousins...
They do got a shot at driverless technology, but the question is how big of a market is that, and how much are they going to own.. Waymo is also a danger in that field...
[+] [-] tnt128|5 years ago|reply
[+] [-] peteradio|5 years ago|reply
[+] [-] pokerhobo|5 years ago|reply
[+] [-] paulsutter|5 years ago|reply
[+] [-] Mockapapella|5 years ago|reply
[+] [-] benmw333|5 years ago|reply
[+] [-] nashashmi|5 years ago|reply
It is a habit now to think this. Not sure if it is still valid.
[+] [-] foxyv|5 years ago|reply
This isn't exclusive to Tesla either. I'm really hating this trend towards "Unauthorized Bread" in the automotive sector.
[+] [-] akmarinov|5 years ago|reply
[+] [-] baybal2|5 years ago|reply
[+] [-] cesarvarela|5 years ago|reply
[+] [-] justicezyx|5 years ago|reply
I am quite interested in his techniques, and am guessing so do a lot of founder wannabes.
[+] [-] nbzso|5 years ago|reply
[+] [-] stunt|5 years ago|reply
[+] [-] dalu|5 years ago|reply
What to believe?
[+] [-] slifin|5 years ago|reply
Like the Forbes list or the real richest person?
[+] [-] dkjaudyeqooe|5 years ago|reply
Not at all.
[+] [-] petercooper|5 years ago|reply
[+] [-] unknown|5 years ago|reply
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[+] [-] Proven|5 years ago|reply
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