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Company founder and CEO Elon Musk may not mention Tesla Motors Inc's (TSLA.O) stock price when his electric car company gives its latest financial update on Wednesday, but it will be front and center for investors divided over its seemingly rich valuation.
After a rally that ended in April, Tesla's market capitalization is currently about $31 billion - equivalent to $620,000 for every car it delivered last year, or $63,000 for every car it hopes to produce in 2020.
By comparison, General Motors Co's (GM.N) $48 billion market value is equivalent to about $4,800 for every vehicle it sold last year.
Tesla's heady valuation - about 125 times the next 12 months of expected earnings - and the implication that shareholders may be overpaying for Musk's small but fast-growing luxury car company have made the stock a favorite of short sellers.
Source: Reuters
(Score: 2, Interesting) by Anonymous Coward on Thursday May 05 2016, @08:13AM
I was just reading some things said by economic thinkers.
Fidel Castro was in the group.
See if you don't think what he said was spot on (and directly related to TFA).
New wealth created without producing any new goods or services is an economy built on a foundation of sand [googleusercontent.com] (orig) [counterpunch.org]
-- OriginalOwner_ [soylentnews.org]
(Score: 1) by khallow on Thursday May 05 2016, @12:52PM
I was just reading some things said by economic thinkers.
Fidel Castro was in the group.
A lot of us think about economics sooner or later, making us economic thinkers in the same sense as Castro and a number of other people on that webpage. So what? I wouldn't take a politician like Castro with such a disastrous record on economics and human rights seriously. Sure, his platitudes may be more or less truthful just like those other would be economic thinkers who are quoted in that webpage, but the problem lies not in the words, but in the considerable gap between those words and actions. Communists and Marxists have been notorious for words woefully failing to match deeds for many generations. Castro has been no exception here.
New wealth created without producing any new goods or services is an economy built on a foundation of sand
Asserting it doesn't make it true. That is not the problem. Rather the problem is overvaluing those new goods and services. There is considerable value being created with a Tesla Motors business, but there is no wealth too large that one can't value it far higher. That is the true foundation of sand.
(Score: 0) by Anonymous Coward on Thursday May 05 2016, @01:31PM
Yes you may be right to dismiss it given the source, but remember the old adage: "even a broken clock is right twice a day."
The value of Tesla hinges on combined value of the brand, which is a lot of things from the IP, to image, to track record of delivering products that are exceptional and innovative (which speaks highly to talent of management and engineering teams). These things do posses value that is somewhat intangible and can vanish overnight. Say your competitor makes a discovery that renders your technology obsolete, or huge number of your employees go to work for a competitor, poof goes that value. I suppose you can call that type of foundation sand, because it is more fickle than land, mineral rights, or means of production.
(Score: 1, Interesting) by Anonymous Coward on Thursday May 05 2016, @06:44PM
You entirely missed the point being made.
(Don't color me surprised.)
When a stock certificate is traded, it simply moves from one pocket to another.
NOTHING NEW IS CREATED.
The day before, Tesla produced n widgets.
The day after, Tesla is still producing n widgets.
Nothing about the actual economy changed.
If the money used in that transaction was instead put toward the building of a NEW factory, -that- would actually ADD to the economy.
Moving your wallet from your left pocket to your right pocket isn't doing anything useful for the economy.
To do something USEFUL, you need to produce a NEW line of widgets or MORE widgets (if production capacity is insufficient).
The point he was making is that the vast majority of "investors" are simply chasing wealth without actually improving the economy.
What the stock markets around the globe do is simply SPECULATION.
(He uses the word "casino" repeatedly.)
I'd like to know what he thinks of e.g. Kickstarter.
-- OriginalOwner_ [soylentnews.org]
(Score: 1) by khallow on Friday May 06 2016, @03:30AM
When a stock certificate is traded, it simply moves from one pocket to another. NOTHING NEW IS CREATED.
So what? Trade isn't about creating new things though there's probably a number of weird examples where it does. It's about exchanging goods or services of value so that the traders' wants are better satisfied.
The day before, Tesla produced n widgets.
The day after, Tesla is still producing n widgets.
Nothing about the actual economy changed.
For whatever reason someone valued the cash represented by the price of their Tesla stock more than the stock, while someone else valued them the other way. The trade enables both parties to the Telsa stock trade to get more of what they valued more. That's what changed about the actual economy.
If the money used in that transaction was instead put toward the building of a NEW factory, -that- would actually ADD to the economy.
Maybe it will. I can say that there's a lot of trading out there and some of the resources traded do eventually end up in factory construction.
Moving your wallet from your left pocket to your right pocket isn't doing anything useful for the economy. To do something USEFUL, you need to produce a NEW line of widgets or MORE widgets (if production capacity is insufficient).
Trading is usually between different parties, not the same party. And even when it is, there's usually a reason, like ease of bookkeeping or the thing being needed more elsewhere, for why it happens.
The point he was making is that the vast majority of "investors" are simply chasing wealth without actually improving the economy. What the stock markets around the globe do is simply SPECULATION. (He uses the word "casino" repeatedly.)
Sounds like this Castro is an idiot. Casinos are about betting on inconsequential things like the roll of dice or the play of cards. Speculation is betting on serious future events that a lot of people are interested in. You would like to know more about the future, right? It's kind of important. Speculation is a way to pool knowledge about future events, secrets, and the value of many things in real time. It doesn't always work very well, but what works better? Credentialed idiots pulling speculation out of their asses? Politicians saying what you want to hear or what is officially condoned? Talking heads with empty words? At least the speculators lose money, if they are wrong.