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Tesla stock reaches $2,000 amid soaring interest in EV companies:
Tesla's stock closed at a record high of $2,000 on Thursday, pushing the company's market capitalization to $370 billion. Tesla has been on a weeklong rally since announcing a five-for-one stock split. The split will be distributed to anyone who holds the stock tomorrow—Friday, August 21.
A little more than two months have passed since Tesla's stock first reached $1,000 per share. Last month, Tesla announced a solid second-quarter profit of $104 million. It was the fourth straight quarter of profits.
That could qualify Tesla for inclusion in the S&P 500 stock index. If Tesla wins a slot in the S&P 500, funds that track the index would need to buy Tesla shares. That could push the stock price up even further.
(Score: 2) by JoeMerchant on Saturday August 22 2020, @01:47PM (4 children)
The stock doesn't "need" to go any higher, taking the capital infusion would definitely be the way to go.
Even still TSLA's market cap today is 380B, as compared to 26B for Ford, 41B for Chevrolet, 217B for Toyota, 45B for Honda, 22B for Panasonic, 30B for Johnson Controls... Even with a $100B cash infusion from an enthusiastic market, $380B seems like an ambitious valuation for the company.
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(Score: 0) by Anonymous Coward on Saturday August 22 2020, @02:02PM
True, but why is Toyota valued so much compared to Honda? AFAIK Honda even has more business lines than Toyota does.
(Score: 0) by Anonymous Coward on Saturday August 22 2020, @03:19PM (2 children)
Market cap is a complete joke, one sucker way overspending on a stock is enough to cause that. If I had a company with 10 shares and somebody opted to pay $1m for one of those shares, my company would have a $10m cap, if they were willing to pay $1, then the same business would have a $10 cap. Think about that for a bit, market cap just measures the number of shares times what the last damned fool was willing to pay. Tesla is worth all those billions of dollars in spite of the fact that their selling cars at a loss. The components alone constitute nearly the entirety of the sale price. Last I hear anything about it, the labor would have to be less than a few hundred dollars in order for them to make money selling the vehicles. So, unless they're making massive amounts on servicing them after sale, they're not making any money like that.
(Score: 2) by JoeMerchant on Saturday August 22 2020, @04:50PM (1 child)
For a thinly traded stock, maybe.
For something with daily trading volume in the millions of shares, and billions of dollars, it's not just one sucker overspending, it's billions of dollars a day being staked on the notion that there's billions of dollars worth of bigger suckers coming in the future to spend more. Sooner or later, the market does "correct" to something approximating the value of the company - whether that's multiples of trailing annual profit, revenue, anticipated revenue, or assets - sooner or later it's based on something.
In this example, I bought in when TSLA's market cap was ~$40B (not long ago, in other words), so if they can turn this hype into a $100B secondary offering, they literally have sucked more cash out of the market than the market thought they were worth a few short months ago. I do hope Elon is smoking the right blend and pulls this one off - as opposed to boneheaded Tweets like "thinking about taking TSLA private..."
🌻🌻 [google.com]
(Score: 0) by Anonymous Coward on Sunday August 23 2020, @12:29PM
Yes, but the same idea applies even with a more popular stock, it just takes more suckers. Just look at all the people that bought Enron and MCI Worldcom before they collapsed. Or the myriad tech companies that don't do anything other than disrupt with no business model. There's tons of examples out there were market cap has no meaningful relationship with the actual value of the company. It's just a measure of how effective the company bullshit artists were at convincing people to buy in.
But, it is at least marginally better than the share price that the DJIA uses to pick it's membership. There's even less relationship between actual value of the business and share price between splits, reverse splits and stock buybacks.