Fords market cap is 41 billion. Honda is 44 billion. GM is 57 billion.
Their cars aren’t anything amazing, and lots of companies are putting out EVs now. Also Musk has destroyed the consumer base for his vehicles (progressives with disposable income), which is going to hurt sales in the future.
I have heard that investors look at Tesla more as a technology company rather than a car company, but even with that why is it valued so much. Tesla is working on robotics, alternative energy and AI, but so are lots of other companies.
Is there a reason Tesla is valued so highly? The P/E ratio is over 200 now.
First Tesla had amazing succes (this is the hard part, the reason not everybody is doing shit like this), then Musk had more money than god, then he played around with crypto and found out how easy it is to manipulate markets when you hold most of the asset being traded.
(and I think others are doing the exact same thing)
Musk is getting paid real money if Tesla’s stock goes up.
He’s spending “fake” money to achieve this. (money he lends with stock as colateral)
The people holding Tesla stocks are not selling, If there is no real trade (low volume 100M/day), it is relatively easy to pump up the price with trivial (for Musk) amounts of cash.
The whole trading volume for 2024 is roughly the same as what Elmo paid for Twitter – spare change.
The people holding stocks get to show their bosses amazing yields,
The people lending Elmo the cash show amazing yields.
Musk get to show the board amazing results.
But it is a mirage.
If any of the larger stockholders sell a serious amount of stock it will drop. I think they know that very well. so they rather lend money with the stock as colateral.
Someone holding 10% of Tesla could (at current trading volumes) lend enough money to fund all trades in Tesla stock for 4-5 years.
The market for cars is finite, but the demand for ‘technology’ is infinite, especially when you are promising essentially magical innovations, “sometime in Q3, maybe Q4 of next fiscal year.”
Or at least they are all waiting for the Greater Fool to come along. The problem woth that is that the Greatest Fool Of All already owns a massive amount of TSLA and routinely jerks off investors with bullshit promises to get them to keep pumping up the stock price based on the Ideal Hot Gas Law.
For some additional fun facts about Elon Musk’s unfulfilled promises:
The previous posters are right, but there’s a not insignificant point that hasn’t been brought up yet: Tesla’s reliance on carbon credits. For those who don’t know, carbon credits allow companies to pollute with CO2. What are carbon credits and carbon offsets?
Manufacturers (Ford and GM for example) have more ICE vehicles than Tesla, so they pollute more than Tesla does, so Tesla has carbon credits to spare. They then sell credits to other makers and rake in a hefty profit (from Feb 2024: Tesla Hits Record High Sales from Carbon Credits at $1.79B)
According to that article, Tesla made “only” $1.79 billion from the credits (vs the current $1 trillion cap), but that’s not chicken feed.
My point is that Tesla’s found an excellent passive way to make money by selling carbon credits, contributing to their market cap. What happens to the credits when the moron gets in office and potentially obliterates the EPA, CAFE and other rules, we’ll have to wait and see.
Also, the CEO has the ear of the incoming administration, so can work on getting favorable tax treatment for his electric cars, government contracts, etc.
Well, until two malignant narcissists come to loggerheads over some particular issue, and Trump decides to persecute Musk for the offense of no longer being an adequately service lickspittle, and Musk responds by galvanizing his adoring legions of Muskholes to insult Trump on ‘X’, and the love that once burned so brightly between them becomes a firestorm of invective and escalating retaliation. I await the coming shitshow with popcorn in hand.
where are you getting this information? That’s not what I’m seeing. As for why it is so high, some have argued that Tesla is primarily a technology company, rather than a car company, and its p/e and other financials should be measured against tech rather than consumer cyclicals. In that light it is still high, but not as exorbitantly high as when measured against other car companies.
There is not and never will be any real explanation for any company’s value on the market. Least not when talking about highly hyped ones like Tesla. Still, there are legitimate reasons why people might be optimistic.
Tesla remains the only EV maker outside of China that is solidly profitable (some seem to finally have positive gross margins, but probably not net margins). If Trump eliminates Federal tax credits for EVs, it’ll affect Tesla sales but it’ll affect everyone else more. And I think we can expect Chinese EV imports to be blocked/tariffed, so they won’t be a threat either. Also, the Biden administration (unsuccessfully) tried to tie EV subsidies to unionized factories, and one can presume that a Harris administration would try to do the same. That’s now off the table, assuming any subsidies survive.
AI in general appears to be limited by the scale of your dataset. Every company working on AI either has access to a massive dataset or they are nothing. Tesla’s self-driving has been making significant improvements lately which could not have happened if they didn’t have millions of cars on the road recording data for them.
Robotics is further out but it’ll be the same story. A useful humanoid robot will need a massive dataset to train with. Tesla seems to be the only company (again, outside of China) with the capability to build millions of them. And so they’ll have access to billions of hours of training data and others won’t.
I think a lot of terminally online progressives overestimated their numbers. Both in general (i.e., the election) and in this specific case. EV growth has slowed in general, but Tesla’s sales numbers are fine. The top 3 EVs in America are the Model Y, the Model 3, and the Cybertruck. The Model Y is the #4 best selling vehicle in the US.
“The market can stay irrational longer than you can remain solvent.” Keynes
Tech stocks and stocks that people treat like tech stocks have been irrational for several decades now. The market collapsed in 2000 and I’ve been waiting for a sequel ever since. Which means being rational has been wrong for two decades. I went berserk when my financial advisor touted Apple back in the day when it sold for over $500 (or some such number). That price was ludicrous! It’s also one-tenth of what the stock is valued today.
Stock prices, of course, are supposed to be future value and that value must be finite. Yet, as Stranger said, some people believe the tech future is infinite. Belief is all that money of any kind has as the ground beneath it. If and when people stop believing, Tesla and all the other tech giants, will find the ground has turned to quicksand.
Nobody can time the market. Tesla’s P/E ratio is a ridiculous 114. It’s market cap has in the past five years gone from $81 billion to $1244 billion. That’s at the same time that’s it’s lost huge amounts of market share and other carmakers are finally challenging it, with the Chinese well ahead. I don’t know when the crash will come. It’s out there, though. Bubbles always burst. In the meantime, enjoy all the pretty colors and enjoy the up part of the roller coaster.
I am no stock analyst but it seems to me that you should be able to compare the market cap for auto manufacturers versus the number of vehicles produced. Googling, General Motors’ market cap is something like $57 billion and they produced 6.2 million vehicles last year, so the stock costs $9,300 per vehicle. Toyota’s market cap is $280 billion and they produced 11.5 million vehicles last year, so the stock costs $24,000 per vehicle. Meanwhile, Tesla has a market cap of 1.37 trillion and they produced less than 1.9 million cars last year, so the stock costs $742,000 per vehicle. That seems high.
I agree about now, but what explains the 10x rise in 2020? The stock went down a bit after Biden was elected but then doubled by the end of 2021. Down in 2022, up in 2023, down in 2024, then up since April. What does that show? I have no answers.
The top 3 selling EVs in the US are all teslas. But if you extrapolate the Q3 numbers for 2024, that works out to about ~650,000 Teslas sold in a year in the US.
Ford, which has a market cap about 3% the size of Tesla, sells almost 2 million cars in the US alone each year. That is more cars than Tesla sells in the entire world and 3x more cars than Tesla sells in the US. Ford sells 4.4 million cars globally a year, double what tesla sells.
Tesla sells half the cars ford does, but its market cap is 30x bigger.
Also globally Tesla cannot compete with chinese EV companies. If we didn’t have massive tariffs on chinese EVs, tesla would be much less popular.