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Today's stock reaction proves that nobody cares. Tesla is still a beloved cult stock. Its current valuation isn't supported by any rational estimates of its gro

Today's stock reaction proves that nobody cares. Tesla is still a beloved cult stock. Its current valuation isn't supported by any rational estimates of its growth and future profitability. Here's another example of Musk's delusion, from the conference call:[1] If you take this year's revenue, around $6 billion or thereabouts, and if we are able to maintain a 30% growth rate for 10 years, add to your 10% profitability number, and have a 20 P/E, our market cap would basically be the same as Apple's is today. Yeah, good luck with that. [1] http://www.thestreet.com/story/13044398/1/elon-musk-just-made-a-staggering-comment-comparing-tesla-to-apple.html http://www.thestreet.com/story/13044398/1/elon-musk-just-mad...

Natsu 12y ago
I think some people are investing not because they want to make a ton of money off of Tesla, but because they want the ventures that company is attempting to succeed.
- toomuchtodo 12y ago
  raises hand I bought quite a bit of TSLA when they went IPO in 2008. I didn't buy it to get rich. I bought it because I want Tesla to succeed.
- greglindahl 12y ago
  You're right; the question is, are there enough people doing that to distort the stock price?
greglindahl 12y ago
So you've already forgotten all the times that Elon has mentioned that Tesla's stock is probably overvalued?! Wow. Short memory. Actually, cherry picking.
PhantomGremlin 12y ago
You downvoters have only proven my point that Tesla is a cult stock. Nobody owning or admiring a cult stock ever wants to be told it's a cult stock. May I remind you that Musk has a long way to go before his legacy matches that of St. Steven of Apple. Last September Musk said "I think our stock price is kind of high right now, to be totally honest". The stock eventually fell from $279 to $203 today. So now Musk says he thinks his current market cap is only 4% of what it could be in a decade. Really? Quite a change from "kind of high". His market cap needs to compound at about 45% a year to achieve that. That puts it into the top 1% of all stock bargains. Don't downvote me. That's too easy. Instead, go buy the stock. Buy $35,000 of it. If Musk is right, your stock will be worth $1,000,000 in ten years. After all, Musk also said "I am hopeful that we can do this without any significant dilution to the company".
- Natsu 12y ago
  It's sort of like a lottery ticket, but people are buying the stock in the hopes of awesome new technology, rather than merely hoping to get rich. As long as you buy only what you can afford to lose, it's probably worth it for some of us. There aren't a whole lot of companies willing to even try really ambitious projects like they do.
  - PhantomGremlin 12y ago
    You make two good points I hadn't really considered. "Lottery ticket" resonates with me since we just recently had a big discussion about playing Powerball. But also (sad for us in general) most companies don't try to do really ambitious stuff. Established companies don't want to rock the boat (The Innovator's Dilemma), startups just want to survive long enough to get noticed and acquired. Of course, there are exceptions. I think Bill Gates really did have a vision of getting a computer running Microsoft software into everyone's house. And there's biotech. A lot of what they do is bet-the-company moonshot stuff. Finding a cure for cancer, that's pretty ambitious. I'd like to invest there, but I know absolutely nothing about the field. You've really helped me understand why people are pulling for Musk and Tesla.
- userulluipeste 12y ago
  "I think our stock price is kind of high right now, to be totally honest" "Musk says he thinks his current market cap is only 4% of what it could be in a decade." I don't understand what does it mean when you say «Quite a change from "kind of high"» - one stated the current situation (given the company assets and dynamics), the other is a future projection. Where did you see a change/contradiction?
  - PhantomGremlin 12y ago
    One way to look at a current stock price, especially one that doesn't pay a dividend, is strictly as "a future projection". That's how investors arrive at a price. Using the words "right now" doesn't remove that aspect of stock valuation. Without a dividend and without a future projection a stock is worthless. Why would anyone pay even a nickel a share for Tesla, unless they were making a future projection and discounting it back to the present? Musk's September 2014 statement and his February 2015 statement were both future projections as far as I'm concerned.

Natsu 12y ago

I think some people are investing not because they want to make a ton of money off of Tesla, but because they want the ventures that company is attempting to succeed.

toomuchtodo 12y ago
raises hand I bought quite a bit of TSLA when they went IPO in 2008. I didn't buy it to get rich. I bought it because I want Tesla to succeed.
greglindahl 12y ago
You're right; the question is, are there enough people doing that to distort the stock price?

greglindahl 12y ago

So you've already forgotten all the times that Elon has mentioned that Tesla's stock is probably overvalued?! Wow. Short memory. Actually, cherry picking.

PhantomGremlin 12y ago

You downvoters have only proven my point that Tesla is a cult stock. Nobody owning or admiring a cult stock ever wants to be told it's a cult stock. May I remind you that Musk has a long way to go before his legacy matches that of St. Steven of Apple. Last September Musk said "I think our stock price is kind of high right now, to be totally honest". The stock eventually fell from $279 to $203 today. So now Musk says he thinks his current market cap is only 4% of what it could be in a decade. Really? Quite a change from "kind of high". His market cap needs to compound at about 45% a year to achieve that. That puts it into the top 1% of all stock bargains. Don't downvote me. That's too easy. Instead, go buy the stock. Buy $35,000 of it. If Musk is right, your stock will be worth $1,000,000 in ten years. After all, Musk also said "I am hopeful that we can do this without any significant dilution to the company".

Natsu 12y ago
It's sort of like a lottery ticket, but people are buying the stock in the hopes of awesome new technology, rather than merely hoping to get rich. As long as you buy only what you can afford to lose, it's probably worth it for some of us. There aren't a whole lot of companies willing to even try really ambitious projects like they do.
- PhantomGremlin 12y ago
  You make two good points I hadn't really considered. "Lottery ticket" resonates with me since we just recently had a big discussion about playing Powerball. But also (sad for us in general) most companies don't try to do really ambitious stuff. Established companies don't want to rock the boat (The Innovator's Dilemma), startups just want to survive long enough to get noticed and acquired. Of course, there are exceptions. I think Bill Gates really did have a vision of getting a computer running Microsoft software into everyone's house. And there's biotech. A lot of what they do is bet-the-company moonshot stuff. Finding a cure for cancer, that's pretty ambitious. I'd like to invest there, but I know absolutely nothing about the field. You've really helped me understand why people are pulling for Musk and Tesla.
userulluipeste 12y ago
"I think our stock price is kind of high right now, to be totally honest" "Musk says he thinks his current market cap is only 4% of what it could be in a decade." I don't understand what does it mean when you say «Quite a change from "kind of high"» - one stated the current situation (given the company assets and dynamics), the other is a future projection. Where did you see a change/contradiction?
- PhantomGremlin 12y ago
  One way to look at a current stock price, especially one that doesn't pay a dividend, is strictly as "a future projection". That's how investors arrive at a price. Using the words "right now" doesn't remove that aspect of stock valuation. Without a dividend and without a future projection a stock is worthless. Why would anyone pay even a nickel a share for Tesla, unless they were making a future projection and discounting it back to the present? Musk's September 2014 statement and his February 2015 statement were both future projections as far as I'm concerned.