My favorite now, is when he bought a billion dollar Bitcoin, just to realize that a single transfer costs 910 KWh energy (not a typo) and to realize thats not very green. So he dropped a tweet, and all the sheep that are hanging by every words of Jobs and Musks and other Techno-Jesus (that never had to do real engineering in their entire life) started selling like crazy, market cap dropped by about 150 Billion dollars.
"Telsa's market cap is half a trillion dollars so 2 billion dollars is 0.4% of that. This is not something consequential to Tesla's future at this point in time" I guess $2B is chump change when you've got a $500B market cap.
"Telsa's market cap is half a trillion dollars so 2 billion dollars is 0.4% of that. This is not something consequential to Tesla's future at this point in time" I guess $2B is chump change when you've got a $500B market cap.
You can't pay wages and build cars with market cap
My favorite now, is when he bought a billion dollar Bitcoin, just to realize that a single transfer costs 910 KWh energy (not a typo) and to realize thats not very green. So he dropped a tweet, and all the sheep that are hanging by every words of Jobs and Musks and other Techno-Jesus (that never had to do real engineering in their entire life) started selling like crazy, market cap dropped by about 150 Billion dollars.Musk should have realised that before! One of the reasons I'm against cryptocurrencies is the awfull amount of energy it consumes. With 910kWh ( ) of electricity you can run 3 decent sized (energy efficient) fridges for a year.
"Telsa's market cap is half a trillion dollars so 2 billion dollars is 0.4% of that. This is not something consequential to Tesla's future at this point in time" I guess $2B is chump change when you've got a $500B market cap.
You can't pay wages and build cars with market cap
"Telsa's market cap is half a trillion dollars so 2 billion dollars is 0.4% of that. This is not something consequential to Tesla's future at this point in time" I guess $2B is chump change when you've got a $500B market cap.
You can't pay wages and build cars with market capExactly. Market cap is a strange metric, I dont know why people keep using these metrics out of context.
If you have a company, where only 1% of the stocks are ever for sale (rest is locked up to drive up the price), and someone makes the last trade at 100K USD for 0.0001% of the company, the company is worth 1 billion dollar, right? No, just try dumpling 1% of the locked up shares on the stock market, and see where that market cap disappears. For these measures to work, one has to assume a rational market. Its not. Look at P/E that is harder to manipulate.
I feel there might be some financial illiteracy here It's like watching flat earthers use "science" to prove the earth is flat. Using words you don't know to justify things you don't understand.
I feel there might be some financial illiteracy here It's like watching flat earthers use "science" to prove the earth is flat. Using words you don't know to justify things you don't understand.I'm just gonna add you to my ignore list, since I really dont have time to explain why you are wrong. I'm sure someone else will. Thanks for the talk.
I agree. Market cap is a metric of limited value. It is probably reported so heavily because it is simple and generates spectacular numbers.
Am I really alone here in my understanding of financial markets?
Dave and tszaboo are trying to apply high level assumptions which only apply to trade of long established companies and are incorrect to assume for growth companies.
Am I really alone here in my understanding of financial markets?
Dave and tszaboo are trying to apply high level assumptions which only apply to trade of long established companies and are incorrect to assume for growth companies.
If you actually understand the current financial markets, then yes you are alone--and you should be able to become fabulously wealthy in short order. However, if you just think you do, then you are just another of the delusional fools that thinks they have a handle on what to the more experienced is an increasingly inexplicable anomaly. I have a pretty good understanding of how the financial markets operate and how VC works, but I have no predictions or comprehensive explanations for the current situation--just the occasional observation. My main worry is that the longer the current situation persists the worse it will turn out in the end.
The current ability of many companies--not just Tesla--to raise capital and/or debt despite facing serious financial problems, is quite unusual. This environment, combined with Tesla's growth narrative and Elon Musk's Jobs-like reality warping abilities did allow a company that has been publicly traded for a decade to raise a huge amount of capital, more than they have ever made in profits. I actually predicted that they would do this right before Elon was asked about it in an earnings call and denied that they were going to do it. Soon after that, as I predicted, they changed their minds and took the easy money. Yes, the sky-high stock price and the resulting market cap greatly reduced the effect of dilution, but I don't think that necessarily was the reason it didn't tank the stock price.
The best quote I've seen lately is a former Fed exec (I think) that said that to understand the current market, we need to consult psychologists, not economists.
What's so abnormal and incomprehensible about a high demand company with a high market share selling shares to raise capital?
What's so abnormal and incomprehensible about a high demand company with a high market share selling shares to raise capital?
I didn't say it was incomprehensible, in fact I said that I predicted it and given the situation, I agree that it was the logical thing to do from Musk's perspective.
It is abnormal because it doesn't usually work this way. Shareholders don't normally tolerate dilution very well and most established going concerns will issue debt rather than new stock. These are extraordinary times and Tesla is not the only beneficiary--other companies have also made additional offerings in situations that would have been unthinkable until now. Tesla's capital raise was huge compared to their assets, but the ludicrous stock price and resultant market cap seems to have obscured that and more importantly, greatly reduced the dilutive effect.
Exactly. Market cap is a strange metric, I dont know why people keep using these metrics out of context.
If you have a company, where only 1% of the stocks are ever for sale (rest is locked up to drive up the price), and someone makes the last trade at 100K USD for 0.0001% of the company, the company is worth 1 billion dollar, right? No, just try dumpling 1% of the locked up shares on the stock market, and see where that market cap disappears. For these measures to work, one has to assume a rational market. Its not. Look at P/E that is harder to manipulate.
High growth companies do capital raises well in excess of their assets all the time. They don't do capital raises comparable to their assets, because they don't have any assets, they're new!
Err, they filled a niche just like the Tesla did.
100km of range was enough for plenty of daily usage scenarios.
Telsa didn't have the range because it was better engineered or had magical new technology, it simply cost a crap load more because it has a ton more batteries and was designed for a different market. Tesla's were and still are firming in the luxury car catgeory, screw the cost. Even the Model 3 barely scraps in under the Australian luxury car tax threshold.
High growth companies do capital raises well in excess of their assets all the time. They don't do capital raises comparable to their assets, because they don't have any assets, they're new!
Sure, in the pre-IPO VC funding phases. A company that needs additional capital a decade or more after their IPO is typically struggling and won't have a high share price. Show me an example of a company a decade or more past IPO with a significant (say 1B+) market cap that has done this without the share price cratering--or already being cratered. This is mostly a sign of the times, IMO, but Musk's ability to sell the growth story is another aspect that I think is problematic. Scaling up isn't the answer to everything and once you reach a certain size and still aren't profitable--or profitable enough--then growth simply diverts attention from the fundamentals for a while. And that's been working for them so far.
Err, they filled a niche just like the Tesla did.
100km of range was enough for plenty of daily usage scenarios.
Telsa didn't have the range because it was better engineered or had magical new technology, it simply cost a crap load more because it has a ton more batteries and was designed for a different market. Tesla's were and still are firming in the luxury car catgeory, screw the cost. Even the Model 3 barely scraps in under the Australian luxury car tax threshold.
What Tesla did was challenge the whole perception of electric cars, and they succeeded IMO.
They have good range too, much better than other pure EVs on the market, yes they're relatively expensive but nobody else was offering long range versions of their EVs at any price. Why does this matter? Because EVs had a reputation for being slow, under powered short ranged toys and somebody needed to break this perception by releasing something that is so far in the other direction that it completely shatters the stereotype.
Nobody can make a blanket statement that EVs are slow and underpowered
Barely.
They had to beg existing signed up owners to pay more to keep them afloat so they could deliver.
They were like a week or something away from going bust, just like SpaceX. Both companies ultimately survivded to florish, but it was touch and go.
Also no BS about Tesla profitability please. They've already had a full year of consecutive quarterly profits despite heavy growth expenditure ($3.24B capex 2020).
I wish there were more new and innovative car companies popping up because virtually the entire automotive industry has become very boring, an endless sea of the most incredibly bland nearly identical cookie cutter crossover SUVs
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The extra $1 billion allows to create a bit of profit. In Tesla's case a large part of the money is spend on R&D and expansion. Not being able to spend $1 billion is a huge chunk of cash and can be the difference between thriving or surviving. Especially for a company still in the expansion phase.
Well, I'm not going to watch endless videos. Too long winded and likely to have biased information anyway. The way I see it Tesla has enough momentum and fans to keep on coasting to make cars. But there will be a limit to the number of BEVs Tesla can sell and that number will be significantly lower compared to what companies like PSA, VW, Toyota, etc can sell. I think the comparison between Tesla and Apple is almost 1 on 1. Both don't really have to compete on price, both come up with stuff which has a high gadget factor and both serve a niche. Even if BEVs fail somewhere in the future, Tesla will stay around.
However, that is NOT what is being said by bdunham7, a minority of "analysts" and some media outlets.