Elon Musk: What's the secret to Tesla's appraisal and is it worth $500 billion
Elon Musk, and Bill Gates, overtook the estate account last week, becoming the second richest person in the world, Tesla exceeding 500 billion dollars.
We wonder here: why investors think the electric car company Tesla is worth so much more than it was a year ago.
At the beginning of 2020, the stock market valued Tesla at about $80 billion - even then, skeptics thought that was a high price for a company that was barely profitable.
Over the year, its shares and valuation rose to more than $500 billion, following news that the company would be included in the S&P 500 index of leading companies.
For example, Tesla now beats Toyota, Volkswagen, Hyundai, GM, and Ford together.
"You're such a rational person!"
I made some rough calculations, and I found that those companies, which were undoubtedly in a weak state, made a joint profit last year of more than $50 billion.
This year, Tesla is on track to make nearly $1 billion. Therefore, to certify the current valuation, you need to be confident that this company will achieve a 50-fold increase in profits through its technology and market dominance in the not-too-distant future.
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Aileen Birbig of Passion Capital told me: "You make a lot of sense!" When I told him Tesla's action was too expensive, it wasn't rational.
It was all about "people who buy the stock at this price, and they think they can sell it at a higher price."
Aileen's work as an investor in the stock market is focused on valuing 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 broader market, rather than on the quality and advantages of each individual company.
Many Tesla fans will rightly point out that the company has steered the automotive industry towards a new path, and has unique battery technology with many other applications, as well as overhead driving.
But it was all true at the beginning of 2020 as well, when it was worth only $80 billion.
Ellen Birbig told me: "Obviously, no commercial fundamentals are indicating an increase of five to six times their valuation since the start of the year only." But she returned to her point that investors were betting in the short term.
"I tend to think that ultimately markets are essentially rational. I think the issue lies in one's time horizon -- these buyers really think they'll be able to sell at a higher price. By the way, so far, they are right to believe ".
One senior reporter on Fleet Street's stock market responded to a question about why prices had risen, saying it was "foolish to try to apply a lot of logic to near-term stock movements", adding a phrase he used to say: "There are more buyers than sellers", giving the opposite answer while the market situation was declining.
Like a bottle of wine made in 1945, a Picasso painting, or a small apartment in London or San Francisco, Tesla's "value" relates to what someone wants to pay no matter how illogical the price seems.
However, one person, presumably knowing a lot about the company, said months ago that the value of the electric car company was overvalued, tweeting in early May on his Twitter Calculation: "The price of the Tesla stock is extremely high."
But who is this person who says that?
Well, it was Elon Musk himself, and his tweet led to a $14 billion drop in Tesla's value.
Since then, the share price has risen fourfold, but let's stop here a little bit and wonder what he knows?
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