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> In the long term In case anyone is wondering how Tesla’s stock price remain wildly detached from its business reality, keep these four words in mind. If you

by pibaker 5mo ago

> In the long term In case anyone is wondering how Tesla’s stock price remain wildly detached from its business reality, keep these four words in mind. If you can convince people that anything about you and your business has to be evaluated on a literally astronomical timescale, you can justify any valuation you desire, because your believers will give you infinite time to realize their investment returns. It has nothing to do with business. They are selling you a vision — which can also come in a pill form, labeled "salvia" and sold at gas stations. I still see people say the cybertruck is built for mars environments, conveniently ignoring the vast technological and economical barriers stopping us from driving commercially produced vehicles on mars. This space data center thing is the same deal. It doesn't matter how long it will take to solve the technical issues with cooling, radiation, maintenance. It doesn't matter if it will make economical sense or not. It doesn't matter if spacex will be the one to actually do it. You just have to believe, and give them some time — a lot of time, so much time that a monkey can type out Hamlet and type it out again backwards. See also the buffoonery coming out of Bay Area "effective altruist" and "longtermism" communities.

pveierland 5mo ago
I fully agree on the reality distortions and valuation chaos surrounding Tesla. This does also follow from the company being very volatile and chaotic, which becomes harder to price. How do you accurately price in e.g. Optimus - it seems really hard to tell at this point - which I guess is also one of the motivators for these strategies. However, in this particular trajectory, SpaceX did build the rockets and did build Starlink which is now the best global-scale wireless communication network for many use-cases. Stretching this trajectory to scale up the technology to facilitate in-space computing is vastly more grounded than Shakespearean monkeys.
philipallstar 5mo ago
All share price fundamentals are based on the long term. Short term trading is why some shares are very briefly high or low.
- sigmoid10 5mo ago
  Well, at least that is what they teach you in college when you learn about the efficient market hypothesis. In reality, investors are getting less rational every year. The modern stock market has become pretty much decoupled from reality.
  - red75prime 5mo ago
    "Everyone is crazy" is a well-measured stance that I can respect. /s On a serious note, if you think that everyone else loses contact with reality, it's a signal to check and recheck your assumptions.
    - sigmoid10 5mo ago
      Maybe check your own knowledge on the topic you're commenting on before talking down on others. Musk for example has famously said himself on several occasions that he thinks Tesla is overvalued. But any company with a >1000x P/E ratio is less screaming "sensible investment" and more "get on the train before it moons" meme-stock. Regardless, none of this is rational anymore. It is mostly hype (and a little bit of insiders rug-pulling each other).
      - red75prime 5mo ago
        "This company is overvalued" and "The market is not rational anymore" are a bit different claims. One of the assumptions I mentioned is "significant overhaul of economy is impossible."
- notahacker 5mo ago
  All share price fundamentals based on the long term have this pesky thing called discount rate which means your [hypothetical] earnings from something expected to happen in 2050 get weighted a lot lower than your 2028 earnings and your 2100 earnings barely figure in it at all though. That's the case on a pure "I could invest my money in something that makes a bigger profit now, and use that money to buy shares in the longer term bet afterwards" basis, but is even more the case when you factor in uncertainty. And "SpaceX's 2026 near monopoly of launch and the 2026 datacentre build rush will still be relevant once we're far enough into the future for inference chips to not need regular replacement and orbital megastructures to be cost competitive with ground ones due to the amount of orbital recycling going on" is pretty uncertain...
madaxe_again 5mo ago
I love how in today’s quarter-based world a decade is now a “literally astronomical timescale”.
robocat 5mo ago
> believers If it were only retail investors, your assumptions could make sense. However plenty of the share ownership is institutional investors. Most of them care a bit more about fundamentals. (I'm ignoring passive investors just using indexes).
- levanten 5mo ago
  They also care about networking and connections.
- rf15 5mo ago
  Secondary effects can also make this a good investment decision: if you have enough other delusional people to buy into it, you still gain from it, even if you believe it's bullshit.
- munksbeer 5mo ago
  A lot of institutional investors get caught out all the time when they make mistakes about the fundamentals.

by pibaker 5mo ago

pveierland 5mo ago

I fully agree on the reality distortions and valuation chaos surrounding Tesla. This does also follow from the company being very volatile and chaotic, which becomes harder to price. How do you accurately price in e.g. Optimus - it seems really hard to tell at this point - which I guess is also one of the motivators for these strategies. However, in this particular trajectory, SpaceX did build the rockets and did build Starlink which is now the best global-scale wireless communication network for many use-cases. Stretching this trajectory to scale up the technology to facilitate in-space computing is vastly more grounded than Shakespearean monkeys.

philipallstar 5mo ago

All share price fundamentals are based on the long term. Short term trading is why some shares are very briefly high or low.

sigmoid10 5mo ago
Well, at least that is what they teach you in college when you learn about the efficient market hypothesis. In reality, investors are getting less rational every year. The modern stock market has become pretty much decoupled from reality.
- red75prime 5mo ago
  "Everyone is crazy" is a well-measured stance that I can respect. /s On a serious note, if you think that everyone else loses contact with reality, it's a signal to check and recheck your assumptions.
  - sigmoid10 5mo ago
    Maybe check your own knowledge on the topic you're commenting on before talking down on others. Musk for example has famously said himself on several occasions that he thinks Tesla is overvalued. But any company with a >1000x P/E ratio is less screaming "sensible investment" and more "get on the train before it moons" meme-stock. Regardless, none of this is rational anymore. It is mostly hype (and a little bit of insiders rug-pulling each other).
    - red75prime 5mo ago
      "This company is overvalued" and "The market is not rational anymore" are a bit different claims. One of the assumptions I mentioned is "significant overhaul of economy is impossible."
notahacker 5mo ago
All share price fundamentals based on the long term have this pesky thing called discount rate which means your [hypothetical] earnings from something expected to happen in 2050 get weighted a lot lower than your 2028 earnings and your 2100 earnings barely figure in it at all though. That's the case on a pure "I could invest my money in something that makes a bigger profit now, and use that money to buy shares in the longer term bet afterwards" basis, but is even more the case when you factor in uncertainty. And "SpaceX's 2026 near monopoly of launch and the 2026 datacentre build rush will still be relevant once we're far enough into the future for inference chips to not need regular replacement and orbital megastructures to be cost competitive with ground ones due to the amount of orbital recycling going on" is pretty uncertain...

madaxe_again 5mo ago

I love how in today’s quarter-based world a decade is now a “literally astronomical timescale”.

robocat 5mo ago

> believers If it were only retail investors, your assumptions could make sense. However plenty of the share ownership is institutional investors. Most of them care a bit more about fundamentals. (I'm ignoring passive investors just using indexes).

levanten 5mo ago
They also care about networking and connections.
rf15 5mo ago
Secondary effects can also make this a good investment decision: if you have enough other delusional people to buy into it, you still gain from it, even if you believe it's bullshit.
munksbeer 5mo ago
A lot of institutional investors get caught out all the time when they make mistakes about the fundamentals.