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That's a market cap of around $3000 per American or $100 per human being in the world. That feels high. Tesla sells around a million cars per year. That valua

That's a market cap of around $3000 per American or $100 per human being in the world. That feels high. Tesla sells around a million cars per year. That valuation is around $1M per car sold annually. That feels high too. I'm bullish about Tesla. I think they're going in the right direction. However, I can't run sensible numbers that make this valuation feel right. I'm not shorting Tesla, mind you. An irrational market can keep going much longer than my wallet.

rp1 5y ago
I don’t think measuring thing vs. cars sold is particularly useful. One way to look at it is this: their P/E is around 330. Their net income grew at 300% last quarter (y/y) and their growth seems to be accelerating. If the price and growth rate was constant, then the P/E ratio would be 82 in just a year. Still high, but not unreasonable for a high growth company.
- blip54321 5y ago
  There's only so much accelerating that can happen. At some point, the market saturates. I looked at Tesla's share of the car market too.
benlivengood 5y ago
I think it's a combination of speculation, economic eco-activism, and futurism which will keep Tesla's market cap a self-fulfilling prophecy. Even $3000/person seems like a pretty good deal to make cheap grid batteries and zero-emission transport widely available, even as charity. Then there are the fairly outlandish AI/robot/neuralink promises that Musk can get away with. Even 5-year-late delivery on those promises would have a tremendous impact and so presumably some investors are betting on that as well. If you take a long view of Musk's projects he's building the infrastructure to colonize Mars (solar, battery storage, rockets, autonomous electric vehicles, trains that operate at Mars' atmospheric pressure). That's unique in the market today and without the ability to invest in SpaceX normal folks will choose Tesla even if it doesn't make much financial sense.

rp1 5y ago

I don’t think measuring thing vs. cars sold is particularly useful. One way to look at it is this: their P/E is around 330. Their net income grew at 300% last quarter (y/y) and their growth seems to be accelerating. If the price and growth rate was constant, then the P/E ratio would be 82 in just a year. Still high, but not unreasonable for a high growth company.

blip54321 5y ago
There's only so much accelerating that can happen. At some point, the market saturates. I looked at Tesla's share of the car market too.

benlivengood 5y ago

I think it's a combination of speculation, economic eco-activism, and futurism which will keep Tesla's market cap a self-fulfilling prophecy. Even $3000/person seems like a pretty good deal to make cheap grid batteries and zero-emission transport widely available, even as charity. Then there are the fairly outlandish AI/robot/neuralink promises that Musk can get away with. Even 5-year-late delivery on those promises would have a tremendous impact and so presumably some investors are betting on that as well. If you take a long view of Musk's projects he's building the infrastructure to colonize Mars (solar, battery storage, rockets, autonomous electric vehicles, trains that operate at Mars' atmospheric pressure). That's unique in the market today and without the ability to invest in SpaceX normal folks will choose Tesla even if it doesn't make much financial sense.