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Because the market can stay irrational far longer than you can stay solvent... Saying that a share is overvalued against its "intrinsic" value is not saying th

• kgwgk 11y ago
  > Saying that a share is overvalued against its "intrinsic" value is not saying the share is overvalued It is exactly what it means [1] > or will go down. The intrinsic value of a lottery ticket is below the price you pay, it doesn't mean you can never win. That said, nobody knows the intrinsic value. In the case of TSLA you have a range of sell-side analysts telling you it's somewhere between $178 and $400. (Edit: to be fair, probably they are using multiples [2] and not a proper intrinsic value calculation. A DCF doesn't get you very far in the current market, much less so in companies like Tesla. For a discussion based on fundamentals see [3]). [1] https://en.wikipedia.org/wiki/Intrinsic_value_(finance) https://en.wikipedia.org/wiki/Intrinsic_value_(finance) [2] https://en.wikipedia.org/wiki/Valuation_using_multiples https://en.wikipedia.org/wiki/Valuation_using_multiples [3] http://aswathdamodaran.blogspot.ch/2014/03/return-to-firing-line-revisiting-tesla.html http://aswathdamodaran.blogspot.ch/2014/03/return-to-firing-...