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So I'm very much in camp AMD. But, market cap has proven over and over again to be kind of bogus. E.g. do we really think Tesla is actually worth more than the

So I'm very much in camp AMD. But, market cap has proven over and over again to be kind of bogus. E.g. do we really think Tesla is actually worth more than the rest of the top 10 or so automakers?

tiahura 4y ago
Things are worth what others are actually willing to pay, there is no such thing as a metaphysical true worth. So yes, Tesla is actually worth whatever the market cap is.
- ido 4y ago
  The less literal reading of OPs statements is that Tesla is overvalued & will at some point in the future face correction down to a value more in line with their sales/profit potential. I have no horse in the game (no Tesla nor any other automotive stocks) but we’ve definitely seen companies being massively overvalued in the past and then face fierce correction - AOL was once worth $222 billion and later (not even that much later) sold for less than 1% of that.
  - tiahura 4y ago
    We’ve been hearing that for at least 4 years at this point. Along with scenarios where Volkswagen or Ford is going to teach Tesla how things really work. I’m not persuaded. First, my understanding is that Tesla has a night and day lead in battery sourcing. Second, Tesla doesn’t have the legacy costs that the others do. Also, at this point, Tesla is still selling cars faster than they can build them. Even if demand weakens, they may still be at max output.
    - tsimionescu 4y ago
      Sure, but Tesla is selling high end cars, which are a rounding error in the car market.
    - enragedcacti 4y ago
      > First, my understanding is that Tesla has a night and day lead in battery sourcing. They have a factory where Panasonic employees come in and make batteries for them (a little glib, but not that far off), but aside from that they really don't have some secret sauce that we know about. They are putting CATL batteries in their cars just like everyone else and they don't have any mining or refining operational unlike BYD. Their battery research and production is massively behind schedule and the future of the Model 3, Y, and Cybertruck all depend on volume 4680 production which is behind at Panasonic as well. Ford has the supply for 400,000 EVs lined up between now and 2024 and Volkswagen has the supply to outproduce Tesla in 2024. BYD is already producing more PHEV/BEV than Tesla, and if there is a solid-state breakthrough it won't be happening at Tesla.
      - ido 4y ago
        Even aside from all of that, I was just reacting to the overly simplified “well by definition they’re worth what the market says they are so there’s nothing to discuss beyond it”. The stock market is routinely “mistaken” and stocks get overhyped and then crash down later (or vice versa). It’s not some omniscient deity that’s never wrong (except in a very literal and impractical way of looking at it).
      - panick21_ 4y ago
        You are making a number of mistakes. First of, Tesla is buying massively from Panasonic, LG and CATL. They are also doing their own batteries in addition to that. The production of that is behind schedule, but not that far, and I can believe how little credit Tesla is getting for literally turning into a battery company over just a few years. Their batteries are gone give them a huge advantage in margin. > depend on volume 4680 production which is behind at Panasonic as well Tesla 4680 have nothing to do with Panasonic. Panasonic is also gone make 4680 format cells for Tesla, but those are totally different and have nothing to do with the cells currently shipping from Texas. > Ford has the supply for 400,000 EVs lined up Tesla makes that many in less then 6 month. And there is a large difference between signing a supply agreement and actually getting it. The lithium industry had scaling problems and pretty much all expert suggest a shortage is coming. For Ford to get all those materials, it requires a huge number of supply expedition projects to go correctly and that is not at all guaranteed. For until a few years ago didn't even believe that had to worry about batteries or battery materials at all. And since then they have done a 180 and try to tell everybody how EV focused and smart they are, when in-fact they are behind the curve. > Volkswagen has the supply to outproduce Tesla in 2024 Not sure where you got this from, but its false. > BYD is already producing more PHEV/BEV than Tesla Nice that you snuck PHEV in-there. But yeah BYD is a great company, but their cars are mostly China only. > if there is a solid-state breakthrough it won't be happening at Tesla. Solid stage or rather what people actually mean by that, lithium anodes, is not inherently superior to silicon anodes. Andt Tesla has some of the most interesting research in that direction. Also solid state will not really be relevant in the BEV space for many years to come.
- FinalBriefing 4y ago
  That idea seems to be ignoring the fact that other brands just haven't made EVs yet. People want Telsas now because, for a long time, they were the only good EVs on the market. As other companies are now rolling out their first EVs, Tesla's market cap will surly go down. I've also heard the argument that Tesla's network of chargers brings more value, but...there will also be more competitors in that space in the near future (and today). So, it seems shortsighted to believe that "market cap" is going to remain as high as it is today.
  - tiahura 4y ago
    You moved the goalpost. What the market cap will be tomorrow is a different question than what is it worth right now. Shares of TSLA are trading at the market price right now. Tomorrow the price and market cap may be different, but it will still be the price sellers will sell and buyers buy. There is no true value set by Buddha, Buffet, Robinhood, or ML.
  - panick21_ 4y ago
    The idea that other companies are now rolling out their first EVs is complete nonsense. The argument 'competition is coming' I have been hearing since 2014. There are many EV that came out that most people don't know much about since they were not produced in large numbers. And we should also consider that the battery space is running into material shortages and Tesla had the longest to prepare for that and are the largest buyer of battery materials/batteries on the plant. Other companies might want to sell more EV, but they will literally not be able to.
mimikatz 4y ago
Yes we do, that's literally what a marketcap is. People who are sure it isn't correct can beat against it and profit in the correction.
- googlryas 4y ago
  Not exactly, because you need to look at depth of market as well. If I find one idiot to buy 1 share of my stock (out of a trillion) for $1, that doesn't mean I really have a $1T market cap.
- nicoburns 4y ago
  > Yes we do, that's literally what a marketcap is. I mean in theory. In practice: - You have to use a very specialised definition of "we". Specifically, it's what people think, weighted by how much money they control. So wealthy people have an outsized say in market cap. Controllers of hedge funds, pension funds, etc an even more outsized say. - People's pricing can be based on how they expect other people to price the stock in the future rather than how much they think it is truly worth based on the fundamentals of the business. If someone's price is based on this, then it is no longer a reflection of how much they think it's worth.
- The_Colonel 4y ago
  Shorting is much more risky than buying stocks. Compare: 1) I'm confident that in the long term, company X will grow in value. I invest $1000 and will wait however long it will take, 10 or more years. I risk these $1000 only, but can earn multiple of it. 2) I'm confident that in the long term, company Y will decrease in value. I can short it with $1000, however either I risk much more than $1000 or I can't set the timeframe (because of forced liquidation). I also can't earn more than $1000. In the long term, I'm also exposed to inflation. Effectively, it's possible to short only in a short timescale, which is super risky. The two betting options are very asymmetric, which IMHO favors overvaluation of certain hyped stocks, since there's no reasonable (not extremely risky) way to bet against them.
  - game-of-throws 4y ago
    There are ways to bet against stocks that don't expose you to unlimited downside.
rjsw 4y ago
I'm not sure this is bogus, Xilinx > Altera.
theropost 4y ago
Yes, people think Tesla is more valuable than the other car markets combined. I honestly don't see the ICE manufacturers really having an edge when it comes to the future of transportation. If anything, I see them having a huge liability - that is a large workforce to reskill, pensions to pay, antiquitated plants to upgrade/maintain, old supply chains to wind down, new supply chains to wind up - if anything, newer entrants into the electric vehicle racket have an advantage.
- 988747 4y ago
  > antiquitated plants to upgrade/maintain LOL, it's Tesla that is way behind in manufacturing. They had trouble hitting their production targets, and they still have quality problems. Toyota/Volkswagen etc will have zero trouble switching their production lines to electric cars, and when they do they will manufacture cheaper, faster, and better. > old supply chains to wind down, new supply chains to wind up Again, advantage at putting together supply chains is with traditional manufacturers, because of their experience. EDIT: Tesla seems to have problems even hiring workers for their factory in Berlin, never heard of any German manufacturer having similar problem.
- Xixi 4y ago
  Unless Tesla figures out how to manufacture cars with much lower carbon emissions (I mean, the manufacturing of the cars themselves), Tesla is not going to fare that much better than the legacies. I hope they do figure it out...
- svara 4y ago
  Maybe some people think that, but sometimes people are deluded or simply are investing based on the greater fool theory. The latter reason means that even the market as a whole might not actually believe in the current market cap, in the long term. I'm personally super skeptical of this market cap. I've been renting a Tesla Model 3 the last couple weeks. It's an awesome car that I would recommend to anyone. When you first drive it you can appreciate what a good job Tesla have done to make it feel like a car from the future. But at the end of the day it's a car. It's got lots of small flaws too, and the self-driving features have scared the shit out of me due to errors they made more than a few times already. Based on this experience it seems completely implausible that Tesla will be able to keep up this "car from the future" experience for very long. How? They're not a leader in self driving, and even if they were, why would they remain so indefinitely? What other innovations would justify this image? People will get used to electric vehicles very quickly, that won't feel new anymore before long.
acchow 4y ago
The reason the other automakers are valued so low is because their long-term growth prospects are negative. The market does not think Ford and GM will be dominant players in 20 years when cars are half software
elromulous 4y ago
To reply to some of the comments: * Yes, something is worth what someone is willing to pay. But we know Mr market is temperamental and irrational, so really what I'm saying is, in the long term / low pass filtered version, do we really think Tesla is worth more than the next 10. * Re anecdotes in which market cap is correct - this doesn't prove anything. E.g. a random number would be correct some of the time also.
njarboe 4y ago
The top ten automakers have huge amounts of debt and pension liabilities. Tesla has neither. None of them are making profitable EVs at scale. Tesla has been hitting their goal of growing at 50% per year for a decade and plans to continue until they are making 20 million cars a year in 2030. Their gross margin on cars is the highest in the industry. The next 5 years are critical for the existing players and many will shrink dramatically or go bankrupt. People already know this and that is why there is a bill in Congress that is a stealth bailout of the domestic auto industry with a $7500 tax credit on cars that have just $750 worth of batteries in them.
- Aloha 4y ago
  I dont think they can continue to grow at that rate and preserve their gross margin. The high end part of the market isnt large enough to sustain 20m cars a year. To give you an idea, for scale, the two largest producers made 10m each in 2019 roughly respectively - and those two are VW and Toyota. I cannot see in any way for Tesla to displace that many units and maintain their margins at the level they have them. The big three domestic manufacturers largely shed their pension liabilities to the UAW when they last went (or nearly went in the case of Ford) bankrupt in 2008.
  - itsoktocry 4y ago
    >and maintain their margins at the level they have them. Tesla's margins shrunk quite a bit last earnings report, so I agree. Selling high-end cars in a niche market is easier than selling 20 million cars annually (which no one has ever done before).
    - Aloha 4y ago
      I'm skeptical that anyone can make 20m cars a year. It also doesnt surprise me that Teslas margins have shrank, I think the price of their vehicles is rendered somewhat inelastic because of the preorder-purchase contract system they use. The vehicle price is more or less fixed at the time of order based on my understanding, and while they can retroactively increase prices, it will likely result in abandonment of the order.
sbf501 4y ago
This is implicit when understanding market cap. Market cap means yes, a certain number of people willing to buy Tesla believe it is worth the combined cap of the next 10 auto makers. It doesn't matter if that is right or wrong, all that matters is that stock traders believe it. If they didn't, the stock wouldn't be that price. That is literally how the stock market / market cap works: if someone will buy it at that price, that is what it is worth. We can all offer our armchair theories about Tesla's actual worth, but until traders start to move en masse, that is what it is worth right now. I think you are asking a different question: will Tesla be more profitable than the other 10 manufacturers in the long run? Because right now they are not. Personally. I don't think they will ever scale to a commodity car as long as Elon is at the helm. I don't think he has the attention span to make a mass produced car, his ego likes doing something novel and he likes luxury. To make profit like the top 10, Tesla has to become a commoner car. I don't think he can pull off an iPhone move, Tesla may always just be a Mac.
- avmich 4y ago
  > and he likes luxury I would argue otherwise, his movement in the recent past showing.
  - sbf501 4y ago
    I'll bite: what is your argument?
    - avmich 4y ago
      Didn't Elon sell the house and moved to live next to the factory?
      - sbf501 4y ago
        Yes, he sold his seven or so mansions in California when he moved to Texas last year, and claimed to go possession free living in a $50k tiny house. First off, one would have to assume he suddenly swore of luxury after seven mansions. Perhaps. He does say a lot of dumb stuff when he's stoned that he ends up trying to hide later on (e.g., submarine scandal). Second, he doesn't seem to spend too much time in his tiny house: https://www.msn.com/en-us/lifestyle/home-and-garden/elon-musk-actually-lives-in-a-waterfront-texas-mansion/ar-AAS9JdI https://www.msn.com/en-us/lifestyle/home-and-garden/elon-mus... Third, where does he keep all those tuxedos he keeps showing up wearing at exclusive events for billionaires? Fourth, he's got like 10 kids and multiple wives. And he keeps getting women pregnant. That's literally a luxury. Maybe we have different definitions. Sure, he owns a cheap house this year that he seems to not live in, but cavorting with other billionaires and treating women like breeding stock and throwing cash at offspring so you don't have to bother raising them doesn't really strike me as living a lean life.
EduardoBautista 4y ago
The other automakers are not in the energy business like Tesla is.
fsckboy 4y ago
> market cap has proven over and over again to be kind of bogus how do you know when a competitor with a high market is failing? when its market cap... er, goes down. i.e. market cap is the best measure we have of a company's future prospects. What you are seeing over and over is that the future is unpredictable.
fallingknife 4y ago
You should use enterprise value (mkt cap + debt - cash), not market cap for that type of comparison. It takes into account the fact that most other car companies are levered but not Tesla. Shows Tesla still very big (overvalued IMO) but not by the same ridiculous margin.
throwawayffffas 4y ago
It's not a really fair comparison. AMD just passed Intel not because it's value is particularly inflated but because Intel's price is falling faster. AMD's Price to earnings is around 35 or so, unlike Tesla's over 100. Furthermore AMD's revenue is about a quarter of Intel's, given that AMD market share has been growing the past few years and they appear to be capable to continue growing it's not unreasonable to bet that in the next say 5 years they are going to have better returns than Intel.

So I'm very much in camp AMD. But, market cap has proven over and over again to be kind of bogus. E.g. do we really think Tesla is actually worth more than the rest of the top 10 or so automakers?

tiahura 4y ago

Things are worth what others are actually willing to pay, there is no such thing as a metaphysical true worth. So yes, Tesla is actually worth whatever the market cap is.

ido 4y ago
The less literal reading of OPs statements is that Tesla is overvalued & will at some point in the future face correction down to a value more in line with their sales/profit potential. I have no horse in the game (no Tesla nor any other automotive stocks) but we’ve definitely seen companies being massively overvalued in the past and then face fierce correction - AOL was once worth $222 billion and later (not even that much later) sold for less than 1% of that.
- tiahura 4y ago
  We’ve been hearing that for at least 4 years at this point. Along with scenarios where Volkswagen or Ford is going to teach Tesla how things really work. I’m not persuaded. First, my understanding is that Tesla has a night and day lead in battery sourcing. Second, Tesla doesn’t have the legacy costs that the others do. Also, at this point, Tesla is still selling cars faster than they can build them. Even if demand weakens, they may still be at max output.
  - tsimionescu 4y ago
    Sure, but Tesla is selling high end cars, which are a rounding error in the car market.
  - enragedcacti 4y ago
    > First, my understanding is that Tesla has a night and day lead in battery sourcing. They have a factory where Panasonic employees come in and make batteries for them (a little glib, but not that far off), but aside from that they really don't have some secret sauce that we know about. They are putting CATL batteries in their cars just like everyone else and they don't have any mining or refining operational unlike BYD. Their battery research and production is massively behind schedule and the future of the Model 3, Y, and Cybertruck all depend on volume 4680 production which is behind at Panasonic as well. Ford has the supply for 400,000 EVs lined up between now and 2024 and Volkswagen has the supply to outproduce Tesla in 2024. BYD is already producing more PHEV/BEV than Tesla, and if there is a solid-state breakthrough it won't be happening at Tesla.
    - ido 4y ago
      Even aside from all of that, I was just reacting to the overly simplified “well by definition they’re worth what the market says they are so there’s nothing to discuss beyond it”. The stock market is routinely “mistaken” and stocks get overhyped and then crash down later (or vice versa). It’s not some omniscient deity that’s never wrong (except in a very literal and impractical way of looking at it).
    - panick21_ 4y ago
      You are making a number of mistakes. First of, Tesla is buying massively from Panasonic, LG and CATL. They are also doing their own batteries in addition to that. The production of that is behind schedule, but not that far, and I can believe how little credit Tesla is getting for literally turning into a battery company over just a few years. Their batteries are gone give them a huge advantage in margin. > depend on volume 4680 production which is behind at Panasonic as well Tesla 4680 have nothing to do with Panasonic. Panasonic is also gone make 4680 format cells for Tesla, but those are totally different and have nothing to do with the cells currently shipping from Texas. > Ford has the supply for 400,000 EVs lined up Tesla makes that many in less then 6 month. And there is a large difference between signing a supply agreement and actually getting it. The lithium industry had scaling problems and pretty much all expert suggest a shortage is coming. For Ford to get all those materials, it requires a huge number of supply expedition projects to go correctly and that is not at all guaranteed. For until a few years ago didn't even believe that had to worry about batteries or battery materials at all. And since then they have done a 180 and try to tell everybody how EV focused and smart they are, when in-fact they are behind the curve. > Volkswagen has the supply to outproduce Tesla in 2024 Not sure where you got this from, but its false. > BYD is already producing more PHEV/BEV than Tesla Nice that you snuck PHEV in-there. But yeah BYD is a great company, but their cars are mostly China only. > if there is a solid-state breakthrough it won't be happening at Tesla. Solid stage or rather what people actually mean by that, lithium anodes, is not inherently superior to silicon anodes. Andt Tesla has some of the most interesting research in that direction. Also solid state will not really be relevant in the BEV space for many years to come.
FinalBriefing 4y ago
That idea seems to be ignoring the fact that other brands just haven't made EVs yet. People want Telsas now because, for a long time, they were the only good EVs on the market. As other companies are now rolling out their first EVs, Tesla's market cap will surly go down. I've also heard the argument that Tesla's network of chargers brings more value, but...there will also be more competitors in that space in the near future (and today). So, it seems shortsighted to believe that "market cap" is going to remain as high as it is today.
- tiahura 4y ago
  You moved the goalpost. What the market cap will be tomorrow is a different question than what is it worth right now. Shares of TSLA are trading at the market price right now. Tomorrow the price and market cap may be different, but it will still be the price sellers will sell and buyers buy. There is no true value set by Buddha, Buffet, Robinhood, or ML.
- panick21_ 4y ago
  The idea that other companies are now rolling out their first EVs is complete nonsense. The argument 'competition is coming' I have been hearing since 2014. There are many EV that came out that most people don't know much about since they were not produced in large numbers. And we should also consider that the battery space is running into material shortages and Tesla had the longest to prepare for that and are the largest buyer of battery materials/batteries on the plant. Other companies might want to sell more EV, but they will literally not be able to.

mimikatz 4y ago

Yes we do, that's literally what a marketcap is. People who are sure it isn't correct can beat against it and profit in the correction.

googlryas 4y ago
Not exactly, because you need to look at depth of market as well. If I find one idiot to buy 1 share of my stock (out of a trillion) for $1, that doesn't mean I really have a $1T market cap.
nicoburns 4y ago
> Yes we do, that's literally what a marketcap is. I mean in theory. In practice: - You have to use a very specialised definition of "we". Specifically, it's what people think, weighted by how much money they control. So wealthy people have an outsized say in market cap. Controllers of hedge funds, pension funds, etc an even more outsized say. - People's pricing can be based on how they expect other people to price the stock in the future rather than how much they think it is truly worth based on the fundamentals of the business. If someone's price is based on this, then it is no longer a reflection of how much they think it's worth.
The_Colonel 4y ago
Shorting is much more risky than buying stocks. Compare: 1) I'm confident that in the long term, company X will grow in value. I invest $1000 and will wait however long it will take, 10 or more years. I risk these $1000 only, but can earn multiple of it. 2) I'm confident that in the long term, company Y will decrease in value. I can short it with $1000, however either I risk much more than $1000 or I can't set the timeframe (because of forced liquidation). I also can't earn more than $1000. In the long term, I'm also exposed to inflation. Effectively, it's possible to short only in a short timescale, which is super risky. The two betting options are very asymmetric, which IMHO favors overvaluation of certain hyped stocks, since there's no reasonable (not extremely risky) way to bet against them.
- game-of-throws 4y ago
  There are ways to bet against stocks that don't expose you to unlimited downside.

rjsw 4y ago

I'm not sure this is bogus, Xilinx > Altera.

theropost 4y ago

Yes, people think Tesla is more valuable than the other car markets combined. I honestly don't see the ICE manufacturers really having an edge when it comes to the future of transportation. If anything, I see them having a huge liability - that is a large workforce to reskill, pensions to pay, antiquitated plants to upgrade/maintain, old supply chains to wind down, new supply chains to wind up - if anything, newer entrants into the electric vehicle racket have an advantage.

988747 4y ago
> antiquitated plants to upgrade/maintain LOL, it's Tesla that is way behind in manufacturing. They had trouble hitting their production targets, and they still have quality problems. Toyota/Volkswagen etc will have zero trouble switching their production lines to electric cars, and when they do they will manufacture cheaper, faster, and better. > old supply chains to wind down, new supply chains to wind up Again, advantage at putting together supply chains is with traditional manufacturers, because of their experience. EDIT: Tesla seems to have problems even hiring workers for their factory in Berlin, never heard of any German manufacturer having similar problem.
Xixi 4y ago
Unless Tesla figures out how to manufacture cars with much lower carbon emissions (I mean, the manufacturing of the cars themselves), Tesla is not going to fare that much better than the legacies. I hope they do figure it out...
svara 4y ago
Maybe some people think that, but sometimes people are deluded or simply are investing based on the greater fool theory. The latter reason means that even the market as a whole might not actually believe in the current market cap, in the long term. I'm personally super skeptical of this market cap. I've been renting a Tesla Model 3 the last couple weeks. It's an awesome car that I would recommend to anyone. When you first drive it you can appreciate what a good job Tesla have done to make it feel like a car from the future. But at the end of the day it's a car. It's got lots of small flaws too, and the self-driving features have scared the shit out of me due to errors they made more than a few times already. Based on this experience it seems completely implausible that Tesla will be able to keep up this "car from the future" experience for very long. How? They're not a leader in self driving, and even if they were, why would they remain so indefinitely? What other innovations would justify this image? People will get used to electric vehicles very quickly, that won't feel new anymore before long.

acchow 4y ago

The reason the other automakers are valued so low is because their long-term growth prospects are negative. The market does not think Ford and GM will be dominant players in 20 years when cars are half software

elromulous 4y ago

To reply to some of the comments: * Yes, something is worth what someone is willing to pay. But we know Mr market is temperamental and irrational, so really what I'm saying is, in the long term / low pass filtered version, do we really think Tesla is worth more than the next 10. * Re anecdotes in which market cap is correct - this doesn't prove anything. E.g. a random number would be correct some of the time also.

njarboe 4y ago

The top ten automakers have huge amounts of debt and pension liabilities. Tesla has neither. None of them are making profitable EVs at scale. Tesla has been hitting their goal of growing at 50% per year for a decade and plans to continue until they are making 20 million cars a year in 2030. Their gross margin on cars is the highest in the industry. The next 5 years are critical for the existing players and many will shrink dramatically or go bankrupt. People already know this and that is why there is a bill in Congress that is a stealth bailout of the domestic auto industry with a $7500 tax credit on cars that have just $750 worth of batteries in them.

Aloha 4y ago
I dont think they can continue to grow at that rate and preserve their gross margin. The high end part of the market isnt large enough to sustain 20m cars a year. To give you an idea, for scale, the two largest producers made 10m each in 2019 roughly respectively - and those two are VW and Toyota. I cannot see in any way for Tesla to displace that many units and maintain their margins at the level they have them. The big three domestic manufacturers largely shed their pension liabilities to the UAW when they last went (or nearly went in the case of Ford) bankrupt in 2008.
- itsoktocry 4y ago
  >and maintain their margins at the level they have them. Tesla's margins shrunk quite a bit last earnings report, so I agree. Selling high-end cars in a niche market is easier than selling 20 million cars annually (which no one has ever done before).
  - Aloha 4y ago
    I'm skeptical that anyone can make 20m cars a year. It also doesnt surprise me that Teslas margins have shrank, I think the price of their vehicles is rendered somewhat inelastic because of the preorder-purchase contract system they use. The vehicle price is more or less fixed at the time of order based on my understanding, and while they can retroactively increase prices, it will likely result in abandonment of the order.

sbf501 4y ago

This is implicit when understanding market cap. Market cap means yes, a certain number of people willing to buy Tesla believe it is worth the combined cap of the next 10 auto makers. It doesn't matter if that is right or wrong, all that matters is that stock traders believe it. If they didn't, the stock wouldn't be that price. That is literally how the stock market / market cap works: if someone will buy it at that price, that is what it is worth. We can all offer our armchair theories about Tesla's actual worth, but until traders start to move en masse, that is what it is worth right now. I think you are asking a different question: will Tesla be more profitable than the other 10 manufacturers in the long run? Because right now they are not. Personally. I don't think they will ever scale to a commodity car as long as Elon is at the helm. I don't think he has the attention span to make a mass produced car, his ego likes doing something novel and he likes luxury. To make profit like the top 10, Tesla has to become a commoner car. I don't think he can pull off an iPhone move, Tesla may always just be a Mac.

avmich 4y ago
> and he likes luxury I would argue otherwise, his movement in the recent past showing.
- sbf501 4y ago
  I'll bite: what is your argument?
  - avmich 4y ago
    Didn't Elon sell the house and moved to live next to the factory?
    - sbf501 4y ago
      Yes, he sold his seven or so mansions in California when he moved to Texas last year, and claimed to go possession free living in a $50k tiny house. First off, one would have to assume he suddenly swore of luxury after seven mansions. Perhaps. He does say a lot of dumb stuff when he's stoned that he ends up trying to hide later on (e.g., submarine scandal). Second, he doesn't seem to spend too much time in his tiny house: https://www.msn.com/en-us/lifestyle/home-and-garden/elon-musk-actually-lives-in-a-waterfront-texas-mansion/ar-AAS9JdI https://www.msn.com/en-us/lifestyle/home-and-garden/elon-mus... Third, where does he keep all those tuxedos he keeps showing up wearing at exclusive events for billionaires? Fourth, he's got like 10 kids and multiple wives. And he keeps getting women pregnant. That's literally a luxury. Maybe we have different definitions. Sure, he owns a cheap house this year that he seems to not live in, but cavorting with other billionaires and treating women like breeding stock and throwing cash at offspring so you don't have to bother raising them doesn't really strike me as living a lean life.

EduardoBautista 4y ago

The other automakers are not in the energy business like Tesla is.

fsckboy 4y ago

> market cap has proven over and over again to be kind of bogus how do you know when a competitor with a high market is failing? when its market cap... er, goes down. i.e. market cap is the best measure we have of a company's future prospects. What you are seeing over and over is that the future is unpredictable.

fallingknife 4y ago

You should use enterprise value (mkt cap + debt - cash), not market cap for that type of comparison. It takes into account the fact that most other car companies are levered but not Tesla. Shows Tesla still very big (overvalued IMO) but not by the same ridiculous margin.

throwawayffffas 4y ago

It's not a really fair comparison. AMD just passed Intel not because it's value is particularly inflated but because Intel's price is falling faster. AMD's Price to earnings is around 35 or so, unlike Tesla's over 100. Furthermore AMD's revenue is about a quarter of Intel's, given that AMD market share has been growing the past few years and they appear to be capable to continue growing it's not unreasonable to bet that in the next say 5 years they are going to have better returns than Intel.