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I'd be totally with you until 2 years ago. Now I'm not so certain. Can you truly look at TSLA and say that there's value creation behind that valuation? Or GME?

• chii 5y ago
  > Can you truly look at TSLA and say that there's value creation behind that valuation? the value of TSLA hasn't been created yet - the event is still in the future. The current price is based on the expectation (by many people) that their value creation in the future will occur. As for GME - the short squeeze certainly did create value. It's like charging someone dying of thirst in the desert for water. But as soon as those people got _some_ water, you can no longer charge the same high price. Thus GME's rise and fall is rational.
  • tinco 5y ago
    That expectation is not based in any reality, not by anyone working at Tesla, and not by anyone with any sort of realistic view of what the company will do in the future. The value of the stock simply does not have any relation to the company itself. It's easy to verify this by asking anyone holding TSLA what amount of profit Tesla will make at the point that its current valuation is justified. It doesn't even really matter how far in the future that point is, it would for an investor basing their investments on fundamentals, but that's not what's going on. As soon as you dive into the numbers, their answer will stop even mentioning the company Tesla, it will be about the American economy or the global economy in general. I agree the short squeeze held value, it was great, but its value hasn't fallen yet, it's still over ten times its fundamental value, if such a thing even exists. If GME's new plans succeed, and it does exceptionally well and it really becomes a big player in the online games industry, maybe its stock would be worth $40 or even $80. If it doesn't, then all this capital is wasted and the stock is probably worth under $4. With those two very extreme scenarios and their appropriate valuations, what is its stock doing sitting at $150? The answer is simple, just find a social gathering of GME investors, like r/superstonk, and read what they're saying about the stock. They're calling the squeeze to 450 a "baby squeeze", and that the big one is still coming. Even though as far as I know the squeeze to 450 was the largest squeeze in the history of the stock market. I'm not saying these stocks are overvalued by the way. If you've got a firm grasp on the dynamics of those stocks, it might make sense to buy/hold at these prices. Just like it made sense to hold Dogecoin to that Goldman Sachs guy. Just don't pretend it's different somehow.
  • alisonkisk 5y ago
    > the short squeeze certainly did create value. That's not value creation, that's zero sum.
• klodolph 5y ago
  > And if it's not the case for these pathetic cases, what does that say about the rest? There’s an old joke that starts with a guy taking a train through Scotland. He sees a black sheep out the window and says, “Ah, Scottish sheep are black. How interesting!” The price of a stock is part market insanity and part value. The proportion varies.