Elon Musk: What is the secret behind the soaring value of Tesla, and is it really worth $ 500 billion?
Elon Musk surpassed Bill Gates in the wealth calculation last week, becoming the second richest person in the world, with his company, Tesla, exceeding $ 500 billion.
Why do investors think electric car company Tesla is worth so much more than it was a year ago?
At the start of 2020, the stock market was valuing Tesla at nearly $ 80 billion - and even then, skeptics believed it was too high a price for a company that was barely making a profit.
Over the year, its shares and valuations rose to more than $ 500 billion, after news emerged that the company would be included in the S&P 500 index of leading companies.
To be clear, Tesla is now worth more than Toyota, Volkswagen, Hyundai, General Motors and Ford combined.
"You're too rational!" The increase in the value of Tesla Corporation.
I did some rough calculations and found that those companies, which were undoubtedly in a vulnerable condition, had combined profits in the last year of more than $ 50 billion.
This year, Tesla is on its way to close to $ 1 billion. Therefore, in order to validate the current assessment, you have to be confident that this company will achieve, through its technology and market dominance, a 50-fold increase in profits in the not-too-distant future.
"You're very logical!" Said Eileen Berbig of Passion Capital. When I mentioned to her that the stock price that was so high in Tesla was illogical.
She added that it is all about "the people who buy the stock at this price, think that they will be able to sell it at a higher price."
Eileen's work as an investor in the stock market focuses on estimating the value of companies that are in the initial stages and lagging behind the stage reached by Tesla. She told us that this is often more like an illogical process, and depends on the mood of the market more broadly, rather than on the quality and features of each individual company.
And many Tesla fans will point out, and rightly so, that the company has directed the auto industry on a new path, has unique battery technology with many other applications, as well as visionary leadership.
But all of this was true at the beginning of 2020 as well, when it was only worth $ 80 billion.
Short-term bet - Tesla's rise in value
“There are clearly no business fundamentals that would indicate a five to six-fold increase in her valuation since the start of the year alone,” said Eileen Burbegg. But she reverts to her view that investors are betting in the short term.
"I tend to think that the markets are fundamentally rational at the end of the day. I think the issue is in one's time horizon ... These buyers really believe that they will be able to sell at a higher price. And by the way, so far, they are right to believe," she added.
A prominent reporter on the Fleet Street stock market responded to a question about the reason for the price hikes, saying that it was “foolish to try to apply a lot of logic to stock movement in the near term,” adding a phrase he used to say: “There are more buyers than sellers,” giving Opposite answer while the market is in decline.
Like a bottle of wine made in 1945, a Picasso painting, or a small apartment in London or San Francisco, Tesla's "value" is about what someone is willing to pay, however irrational the price.
However, one person, presumably knowing a lot about the company, said months ago, that the value of the electric car company was overvalued, and wrote a tweet in early May on his Twitter account, saying, "The share price of Tesla is very high."
But who is this person saying that?
Well, it was Elon Musk himself, and his tweet drove $ 14 billion off Tesla's value.
Since then, the share price has quadrupled, but let's pause here and ask what does he know?
BBC
