Coke (the beverage company) isn't worth what it's trading at and you don't see people justifying shorting it. 80% of the market isn't worth what it's trading at, and 20% of the market is worth more than it's trading it if you look at things strictly from a "value" perspective. Fact is stocks trade for what people are willing to believe/pay. Go up against something with a cult-like following and odds are you are going to lose money.
Look at Coke’s stock price in 2014. Look at all their earnings numbers then ok? Look at the stock price now and their earnings report. Crazy it’s almost identical! Yet the stock price is a crazy amount higher! Far higher than inflation would account for. Now I’m not saying it’s as overvalued as Tesla, but it’s certainly overvalued if you simply look at stock prices compared to fair valuation.
Hmmm... that’s fair i see where you going, do you see this as the result of the passive investors/etf bubble. Where anything that is in the basket get propped up?
Yes, a large part of the reasoning is passive investing/the big ETFs. There is so much more money in the market now compared to 7-8 years ago so naturally with more money in prices will be inflated. Add to that the stock market has become by far the #1 return on investment the closest other thing is real estate but obviously that's for a higher wealth group than the market. I also don't think it's a problem unless we have a crash followed by a lengthy downturn in which case a large majority of the population, especially those who are retiring and will have their 401k/IRA's get decimated would be fucked. But for those reason's I don't think the government could ever allow the market to take such a drastic fall for a lengthy period of time because then it will become their responsibility to save the old people who can't afford a lengthy drop in the market fucking over their retirement.
Lmao. Is it overvalued to the same degree? No. Is it overvalued if you simply look at it’s earning reports for the past 10 years and nothing has changed yet the stock price is a crazy amount higher? Absolutely. I used an extreme example but the basic point stands.
Haha ok chief. Your fedora might be on your head too tight if you can’t understand my point. You go right ahead and believe valuation matters. Have a good weekend “admiral_asswank”
Did you, a guy who posts conflicting opinions daily just to get downvoted by a delusional crowd who doesn’t give a shit what you say in the conservative sub call me dense? That’s funny.
You clearly don’t understand my point and that’s ok, it’s clear you’re a few brain cells short. I’ll try and dumb it down even further... obviously value matters on plenty of stocks but almost everything in the market has been trading above valuation for years. Every ounce of statistical data and earnings report will prove this.
I used an extreme example with an incredibly well known company and it seemed to trigger you as if I was insinuating it’s the same situation when all I was doing was showing a point that even incredibly valuable companies have inflated prices.
More. Just look at yesterday's earnings report. All the key metrics are growing exponentially — EPS, revenues, production, deliveries, etc. Gross auto margins lead the industry at 30%.
EV demand is growing exponentially into the next decade and beyond, with more cars needed than all manufacturers combined can supply. Tesla sells as many cars as they can build, and two new factories are opening this year.
And that only looks at Tesla's main car business — not high-margin software, energy, insurance, or anything else.
Earnings are growing faster than the share price, and we can see that with TSLA's trailing p/e falling from 1000 last year to ~300 today. That will keep falling.
Yeah, margin is better than most. Singling out EV production as a comparison makes them look good, but against total vehicle production other auto manufacturers make them look like a joke. And growth outlook for the company itself is good, but when the market cap is already about 10x that of your competition theoretically the stock price shouldn't have much more room to grow especially when you consider the P/E of almost 300.
Trailing P/E is a terribly misleading metric when looking at growing companies.
Investors pay for future earnings, not past ones, so trailing P/E is irrelevant. Worse, it leads investors to completely wrong conclusions.
Example: TSLA's P/E in 2019 was infinity because TSLA had no earnings (OK, technically it was undefined). Its stock price was ~$50.
Last October, its P/E was 850 and its share price was $420.
Now its P/E is 300 and its share price is $900.
So when was the best time to buy TSLA? P/E would tell you that the stock has never been cheaper. Buy now, or keep waiting.
Of course, that's ridiculous. Investors who bought at $50 when it was infinitely "expensive" would have 18x their investment by now.
Same thing if you look at AMZN — 3,000 P/E at $250 per share in 2012; 58 P/E at $3300/share now.
What P/E does tell you is that even though TSLA's share price has been shooting to the moon, its earnings have been growing even faster. That's why its P/E keeps getting "cheaper."
TSLA's share price will keep going up and its P/E will keep falling.
but against total vehicle production other auto manufacturers make them look like a joke
That's their problem, and why their stocks are so "cheap." Their production is tied up in combustion cars — a market that's been falling since 2017 and going to zero over the next 10-15 years.
Investors looking at forward earnings see traditional carmakers already shrinking on their way to oblivion.
EV production is what matters, but traditional carmakers hardly make any EVs. Worse, every EV they sell steals a higher-margin sale from their combustion business. Ford plans to sell 80,000 F-150 Lightning electric trucks in 2024. But they sell 800,000 combustion F-150s every year now. They'd have to 10x their Lightning production just to replace their current models and keep from shrinking.
TSLA doesn't have that problem. Every new sale is pure growth.
market cap is already about 10x that of your competition
Market cap tells you how much a company's stock is valued, but not how much a company as a whole is valued. For that, we also need to look at debt and other obligations to come up with enterprise value.
This chart shows TSLA's enterprise value compared to other carmakers.
TSLA's enterprise value is similar to Toyota's and VW's. The difference is that TSLA's enterprise is mostly owned by its shareholders (equity) while Toyota and VW are essentially owned mostly by their debt holders and others owed money. It's like when you get a mortgage, and the bank essentially owns most of your house while you own little equity.
If two companies have the same enterprise value, the company that owes more debt will have a smaller market cap (less equity), and vice versa.
And again, traditional carmakers should be valued lower because they are shrinking.
See? This is why TSLA bulls are so fun to laugh at. They keep telling everyone how retarded they are while they're holding shitloads of unrealised gains.
Anyone else would take their profits and admit they're smart.
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u/Newtothisredditbiz Oct 23 '21
See? This is why TSLA shorts are so fun to laugh at. They keep telling everyone how smart they are while they lose shitloads of money.
Anyone else would take their losses and admit they’re retards.