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Eight of the ten largest companies on the NYSE are tech companies (the others are Saudi Aramco and Berkshire Hathaway). Of those eight, only Tesla needs access

Eight of the ten largest companies on the NYSE are tech companies (the others are Saudi Aramco and Berkshire Hathaway). Of those eight, only Tesla needs access to cheap capital. Edit: Tesla and Saudi Aramco (duh) aren't actually on the NYSE... Something something HN before coffee something Edit 2: Neither is Alphabet or Micros... you know what, just read publicly traded companies instead of NYSE.

gabrielsroka 4y ago
Nit: Tesla trades on NASDAQ, not NYSE. I think I know what you mean, but what are you really saying here?
- solveit 4y ago
  Agh, I clicked the first google result for "NYSE by market cap" and it was something else. And of course Saudi Aramco doesn't trade on the NYSE either, that should've been more obvious. What I'm saying is that tech is a mature sector of the economy that is adjacent to but different from the startup world, and while cheap capital may inflate startup valuations, it's not the reason Apple or Alphabet are valued as they are.
lumost 4y ago
However the implied valuation of these companies is uneven. Tech company profits are valued at much higher multiples than Saudi Aramco or Berkshire profits. AAPL is a 2.73 trillion dollar company based on a 27x P/E ratio. higher interest rates will eat into these multiples. Given we are coming off of zero interest rates, it's unclear what the correct multiple is for any non-zero interest rate.
- gen220 4y ago
  > higher interest rates will eat into these multiples Unless the potential for higher future interest rates were not baked into the quoted multiple. Interest rates are just one factor among many that go into a price. And they are among the most predictable. The biggest factor contributing to tech companies’ higher multiples is that every year they have come up with a new way to print money (especially AMZN and AAPL) for a decade running. To assign a lower P/E is, fundamentally, to discount that track record. Not that it’s a bad bet, but it doesn’t have much to do with interest rates, IMO.
ethbr0 4y ago
The companies aren't the ones who need continued access to cheap capital. It's the investors holding valuations at high multiples.
ecshafer 4y ago
I don't think that Tesla is a tech company. They trade as a tech company, sure. But down the line I don't think they will. The main differentiator with tech companies is that they scale on a fungible product (software). If Tesla is a tech company, then we should call Ford, GM, VW, Toyota, etc. all tech companies.
- hn_throwaway_99 4y ago
  I hope others feel the deep irony in not considering Tesla, a company whose technology has revolutionized the transportation industry, a "tech" company, but every mobile-app-of-the-month company somehow should be.
  - Apocryphon 4y ago
    After software swallowed the world, it also swallowed the branding of “tech”.
  - giantrobot 4y ago
    > a company whose technology has revolutionized the transportation industry They make electric cars with what are essentially really large laptop batteries. There's not a lot of "revolution" there. There's evolution. At the end of the day they're making cars that fit people and drive on existing roads. Their technology isn't bad but it's not some major revolution. The technology they crow about like FSD does not work very well. It's also unlikely to get better because of hubris at the top about sensors. They want to be seen as a tech company but they're a car company. Electric cars are cool and are a marked improvement over ICE cars but they're still cars.
    - ethbr0 4y ago
      Nobody ever notices or respects manufacturing revolutions. :( Apple's biggest revolution was the manufacturing chains they built in China.
  - colinmhayes 4y ago
    Ford's technology also revolutionized the transportation industry. Are they a tech company?
throw__away7391 4y ago
As people were pointing out by my memory as long as two decades ago, "tech company" has/is going to cease to be a meaningful category. I mean are Meta, Taiwan Semiconductor, and Tesla meaningfully in the same industry?
cma 4y ago
> the others are Saudi Aramco and Berkshire Hathaway Berkshire is 20% Apple now.

gabrielsroka 4y ago

Nit: Tesla trades on NASDAQ, not NYSE. I think I know what you mean, but what are you really saying here?

solveit 4y ago
Agh, I clicked the first google result for "NYSE by market cap" and it was something else. And of course Saudi Aramco doesn't trade on the NYSE either, that should've been more obvious. What I'm saying is that tech is a mature sector of the economy that is adjacent to but different from the startup world, and while cheap capital may inflate startup valuations, it's not the reason Apple or Alphabet are valued as they are.

lumost 4y ago

However the implied valuation of these companies is uneven. Tech company profits are valued at much higher multiples than Saudi Aramco or Berkshire profits. AAPL is a 2.73 trillion dollar company based on a 27x P/E ratio. higher interest rates will eat into these multiples. Given we are coming off of zero interest rates, it's unclear what the correct multiple is for any non-zero interest rate.

gen220 4y ago
> higher interest rates will eat into these multiples Unless the potential for higher future interest rates were not baked into the quoted multiple. Interest rates are just one factor among many that go into a price. And they are among the most predictable. The biggest factor contributing to tech companies’ higher multiples is that every year they have come up with a new way to print money (especially AMZN and AAPL) for a decade running. To assign a lower P/E is, fundamentally, to discount that track record. Not that it’s a bad bet, but it doesn’t have much to do with interest rates, IMO.

ethbr0 4y ago

The companies aren't the ones who need continued access to cheap capital. It's the investors holding valuations at high multiples.

ecshafer 4y ago

I don't think that Tesla is a tech company. They trade as a tech company, sure. But down the line I don't think they will. The main differentiator with tech companies is that they scale on a fungible product (software). If Tesla is a tech company, then we should call Ford, GM, VW, Toyota, etc. all tech companies.

hn_throwaway_99 4y ago
I hope others feel the deep irony in not considering Tesla, a company whose technology has revolutionized the transportation industry, a "tech" company, but every mobile-app-of-the-month company somehow should be.
- Apocryphon 4y ago
  After software swallowed the world, it also swallowed the branding of “tech”.
- giantrobot 4y ago
  > a company whose technology has revolutionized the transportation industry They make electric cars with what are essentially really large laptop batteries. There's not a lot of "revolution" there. There's evolution. At the end of the day they're making cars that fit people and drive on existing roads. Their technology isn't bad but it's not some major revolution. The technology they crow about like FSD does not work very well. It's also unlikely to get better because of hubris at the top about sensors. They want to be seen as a tech company but they're a car company. Electric cars are cool and are a marked improvement over ICE cars but they're still cars.
  - ethbr0 4y ago
    Nobody ever notices or respects manufacturing revolutions. :( Apple's biggest revolution was the manufacturing chains they built in China.
- colinmhayes 4y ago
  Ford's technology also revolutionized the transportation industry. Are they a tech company?

throw__away7391 4y ago

As people were pointing out by my memory as long as two decades ago, "tech company" has/is going to cease to be a meaningful category. I mean are Meta, Taiwan Semiconductor, and Tesla meaningfully in the same industry?

cma 4y ago

> the others are Saudi Aramco and Berkshire Hathaway Berkshire is 20% Apple now.