PE isn't a cheat code to rational stock valuation, it's the "nothing ever changes" assumption dressed up in a formula. PE looks at past earnings, while the price of a stock buys its future earnings. A modest PE on NVDA says "I expect datacenter revenue to continue" while a modest PE on TSLA would say "I expect robotaxi to fail." These are fair opinions to have, as are their opposites, but if datacenter revenue collapses then today's modest PE won't save NVDA and if TSLA can pull off robotaxi then today's high PE will be vindicated. Stocks are all about Future Earnings, but you can't put that in a column and sort by it so we have PE.
You can certainly have success while avoiding high PE stocks, but you are on a site about startups and your name suggests you work in the tech sector, which are both places where high PE often does make sense and it pays to be familiar with the reasons.
> a modest PE on TSLA would say "I expect robotaxi to fail."
No. Just having competition is enough to destroy the expectations on TSLA.
And realistically, they are abut last on that race, being thrown out of track about a decade ago and never managing to make anything work since then. So, yeah, betting on no competition is a very weird option.
Even if they can get robotaxi to work on a level better than Waymo currently is shouldn’t they just be valued as if they were Uber with $0 paid out to contractors? The labor is not that significant a cost to what’s fundamentally a taxi business
The more interesting dynamic with Nvidia though is that most of its revenue is actually fueled by bubbles as well. Teslas earnings are much more grounded and natural.
I don't why this comment was downvoted. You raise an important point. I also noticed that you (carefully?) made no comment about Telsa's stock price. Instead, you only focused on their earnings -- which are excellent for a car company.
schmidtleonard|11 months ago
You can certainly have success while avoiding high PE stocks, but you are on a site about startups and your name suggests you work in the tech sector, which are both places where high PE often does make sense and it pays to be familiar with the reasons.
marcosdumay|11 months ago
No. Just having competition is enough to destroy the expectations on TSLA.
And realistically, they are abut last on that race, being thrown out of track about a decade ago and never managing to make anything work since then. So, yeah, betting on no competition is a very weird option.
Yossarrian22|11 months ago
hattmall|11 months ago
germinalphrase|11 months ago
How do you rationalize Tesla being valued higher than the combined valuation of the next ten car companies? They will be the only one left standing?
diamond559|11 months ago
sulam|11 months ago
throwaway2037|11 months ago