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If your first sentence were true, then the stock shouldn't have been affected much by today's news. Instead, it fell significantly. The price of the stock has

If your first sentence were true, then the stock shouldn't have been affected much by today's news. Instead, it fell significantly. The price of the stock has to do with how much money it might make in the future, and where they are on their growth trajectory. The news today signifies that the trajectory might be lower overall, or they might be further behind than investors thought.

Arzh 13y ago
The stock is up $1.61 on the day, the stock did not tumble, what tumbled was wall street's interest.
- dxhdr 13y ago
  What we're talking about is the after-hours trading price of the stock. It will open tomorrow at the new, reduced price.
- tanzam75 13y ago
  > The stock is up $1.61 on the day, the stock did not tumble, what tumbled was wall street's interest. Up $1.61 at the closing bell, then down $22 after-hours, equals down $20. Quite a substantial move for a $176 stock -- at least, it was a $176 stock at 4 o'clock on November 5.
ChuckMcM 13y ago
[I don't currently own any stock or options in TSLA] Sort of and sorta not. There is a tremendous amount of speculation in Tesla stock. That came about from a number of people making very large bets against and for the company (option trading is quite active for such a 'young' company). The stock is "priced for perfection" which is to say it is priced at a value that only makes sense if Tesla meets every objective, has no missteps, and doesn't run into any technical or legal issues. Consequently there are lots of people who have various hedges in place to sell stock if it goes down, or buy covering options, etc. Thus any news tends to be magnified on this stock. Had it not been priced so tightly the effect would have been more inline with other companies when they announce results. (a 3 - 5% change on "news")
- tsenkov 13y ago
  Disclaimer: I have no idea how a stock is prised. Is the stock prise directly related to the revenue/losses of the company? If this is true, couldn't the losses be explained by this: >"Production in the quarter significantly exceeded deliveries in order to fill the pipeline of vehicles in transit to Europe and provide cars for service and marketing uses." Probably by a long shot (considering so many uncertainties in my logic), but it seems to me that they simply loss money, because they needed to fill the stores in unexplored markets, which resulted in stock prise decline and not that significant one (as already pointed, the stock went up 460% just this year). Edit: 38M is roughly equal to 470 Model S cars on average of $81k. If their production cost is 50%, this means about a 1000 cars could make up for the losses. And when you include the Supercharger network (do they make any money of that? and how much does it cost to build these stations?) and shipping of all extra production (without an order) to Europe it kind of seems reasonable.
  - rjtavares 13y ago
    > Is the stock prise directly related to the revenue/losses of the company? Yes. However, expectations are more important than past behaviour, especially in new businesses. People buying Tesla stock are guessing their growth/earnings trajectory, and if reality deviates from that they'll sell (simplifying here, obviously).
  - podperson 13y ago
    Stock is priced like anything else: what people are willing to pay. In theory a stock represents a share of a business, and so its price is a bet on the lifetime return of the stock at the time of purchase -- if you pay $100 for a stock today, you expect the "net present value" of that stock to pan out to at least the net present value of $100 invested in something really safe (e.g. in treasuries... oh wait, hmm... gold, er ah no... in C-notes under your bed).

Arzh 13y ago

The stock is up $1.61 on the day, the stock did not tumble, what tumbled was wall street's interest.

dxhdr 13y ago
What we're talking about is the after-hours trading price of the stock. It will open tomorrow at the new, reduced price.
tanzam75 13y ago
> The stock is up $1.61 on the day, the stock did not tumble, what tumbled was wall street's interest. Up $1.61 at the closing bell, then down $22 after-hours, equals down $20. Quite a substantial move for a $176 stock -- at least, it was a $176 stock at 4 o'clock on November 5.

ChuckMcM 13y ago

[I don't currently own any stock or options in TSLA] Sort of and sorta not. There is a tremendous amount of speculation in Tesla stock. That came about from a number of people making very large bets against and for the company (option trading is quite active for such a 'young' company). The stock is "priced for perfection" which is to say it is priced at a value that only makes sense if Tesla meets every objective, has no missteps, and doesn't run into any technical or legal issues. Consequently there are lots of people who have various hedges in place to sell stock if it goes down, or buy covering options, etc. Thus any news tends to be magnified on this stock. Had it not been priced so tightly the effect would have been more inline with other companies when they announce results. (a 3 - 5% change on "news")

tsenkov 13y ago
Disclaimer: I have no idea how a stock is prised. Is the stock prise directly related to the revenue/losses of the company? If this is true, couldn't the losses be explained by this: >"Production in the quarter significantly exceeded deliveries in order to fill the pipeline of vehicles in transit to Europe and provide cars for service and marketing uses." Probably by a long shot (considering so many uncertainties in my logic), but it seems to me that they simply loss money, because they needed to fill the stores in unexplored markets, which resulted in stock prise decline and not that significant one (as already pointed, the stock went up 460% just this year). Edit: 38M is roughly equal to 470 Model S cars on average of $81k. If their production cost is 50%, this means about a 1000 cars could make up for the losses. And when you include the Supercharger network (do they make any money of that? and how much does it cost to build these stations?) and shipping of all extra production (without an order) to Europe it kind of seems reasonable.
- rjtavares 13y ago
  > Is the stock prise directly related to the revenue/losses of the company? Yes. However, expectations are more important than past behaviour, especially in new businesses. People buying Tesla stock are guessing their growth/earnings trajectory, and if reality deviates from that they'll sell (simplifying here, obviously).
- podperson 13y ago
  Stock is priced like anything else: what people are willing to pay. In theory a stock represents a share of a business, and so its price is a bet on the lifetime return of the stock at the time of purchase -- if you pay $100 for a stock today, you expect the "net present value" of that stock to pan out to at least the net present value of $100 invested in something really safe (e.g. in treasuries... oh wait, hmm... gold, er ah no... in C-notes under your bed).