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If there's enough money believing in the company the stock price doesn't really matter. They will hold as long as they believe the company has a chance to pay o
by std_throwaway 8y ago
If there's enough money believing in the company the stock price doesn't really matter. They will hold as long as they believe the company has a chance to pay out (far) in the future. It's less a publicly traded stock and more a long term investment.
- Xcelerate 8y ago> It's less a publicly traded stock and more a long term investment I thought that was kind of the original point of stock.
- std_throwaway 8y agoThe point is a lower barrier of entry because anyone can just buy your stock and therefore a larger pool of potential investors. The downside is that the mass of those investors (on average) are not as well informed as a few select big investors. This gave Tesla a great amount of money to work with as long as their star was shining but now it could backfire badly.
- anoncoward111 8y agoYour theory is partially correct. Let's say Tesla is 10x overvalued. If the dumb believers weren't holding the stock, it would be 1x. This, as you said, is correct-- they're propping up the stock. However, Tesla isn't immune to short-term stocks. It will fluctuate between 5x and 10x overvalued, e.g, the stock should really be at $50 but is trading around 300-400. I'd be very happy if I shorted Tesla at $370 or whatever its high price was.