3 ms·

This is all true, but it's a bit of a shame as it puts a limit on market efficiency. To take an extreme example, every rational person knew that Gamestop wasn't

This is all true, but it's a bit of a shame as it puts a limit on market efficiency. To take an extreme example, every rational person knew that Gamestop wasn't worth $20B+. (Or even close to what it's trading at now.) But given the costs and risks of shorting, there was (is) no way for most traders to profit off of that with a reasonable risk/reward, and so the mispricing persists. Tesla could be seen as a less extreme example of the same. Unlike Gamestop, it's a very successful company with a lot going for it. But was it ever really worth more than every other car company combined?

jliptzin 3y ago
If it’s making more profit per vehicle than all other car companies combined, while continuing to grow its business at a rapid clip, then do you think that justifies the market cap? https://www.visualcapitalist.com/charted-teslas-unrivaled-profit-margins/ https://www.visualcapitalist.com/charted-teslas-unrivaled-pr... Or what about rapidly growing revenue every year, which no other car company is currently able to do? https://www.macrotrends.net/stocks/charts/TSLA/tesla/revenue https://www.macrotrends.net/stocks/charts/TSLA/tesla/revenue
- wredue 3y ago
  Just no. Teslas revenue growth is rapidly slowing. Growth contracting by 50% each year since 2019 Tesla has .66x the revenue of GM but 18x the market cap. Even at todays rate of growth, teslas market cap today is valued at like 100 years in the future. Disclaimer, I didn’t even do napkin math because teslas valuation is utterly absurd and claiming it’s proper in comparison to other companies in the same segment is completely ludicrous.
  - jliptzin 3y ago
    Why are you not comparing profit? Or taking into account the debt levels of each company? There is more to valuation than revenues
    - wredue 3y ago
      Who cares? No company with declining growth and half the revenue is worth 18x another in the same segment.
      - jliptzin 3y ago
        And what if one of those companies has $200 billion in debt to service at a high interest rate and the other has close to no debt? How does that impact your calculations? I would love to see your valuation model.

jliptzin 3y ago

If it’s making more profit per vehicle than all other car companies combined, while continuing to grow its business at a rapid clip, then do you think that justifies the market cap? https://www.visualcapitalist.com/charted-teslas-unrivaled-profit-margins/ https://www.visualcapitalist.com/charted-teslas-unrivaled-pr... Or what about rapidly growing revenue every year, which no other car company is currently able to do? https://www.macrotrends.net/stocks/charts/TSLA/tesla/revenue https://www.macrotrends.net/stocks/charts/TSLA/tesla/revenue

wredue 3y ago
Just no. Teslas revenue growth is rapidly slowing. Growth contracting by 50% each year since 2019 Tesla has .66x the revenue of GM but 18x the market cap. Even at todays rate of growth, teslas market cap today is valued at like 100 years in the future. Disclaimer, I didn’t even do napkin math because teslas valuation is utterly absurd and claiming it’s proper in comparison to other companies in the same segment is completely ludicrous.
- jliptzin 3y ago
  Why are you not comparing profit? Or taking into account the debt levels of each company? There is more to valuation than revenues
  - wredue 3y ago
    Who cares? No company with declining growth and half the revenue is worth 18x another in the same segment.
    - jliptzin 3y ago
      And what if one of those companies has $200 billion in debt to service at a high interest rate and the other has close to no debt? How does that impact your calculations? I would love to see your valuation model.