SoylentNews is people
SoylentNews
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) by Capt. Obvious on Friday May 06 2016, @06:17AM
Ah, it's a real loan of stock you sell. You're not just selling a contract which obligates you to buy back the stock later.
Thanks for the help, I never really understood shorting before. I mean, I got the concept at a high level, but not the mechanics.
(Score: 3, Interesting) by legont on Friday May 06 2016, @10:18PM
Real is a shaky concept when one talks about financial innovations, but yes, in this particular case broker has to have real securities on somebody's account that he will loan to you. Conspiracy theorists claim that they in fact violate the rules, especially when commodity such as gold is concerned. There are also contracts without any underlying securities involved, but they are usually in futures/forwards/swaps fields.
Nevertheless, they will charge you for keeping short position.
"Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.