I just saw a post that said Tesla stock is only worth 1/5 as much as it’s valued as. It doesn’t make sense to me.
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It’s fascinating how perceptions of value can change over time. In 2018, many believed Tesla was overvalued at 50 billion, yet today it’s valued at 800 billion, and with current financials the stock would have been extremely undervalued in 2018.
This example with Tesla shows us how tricky it can be to guess the value of things. Imagine you have a toy that you thought was only worth a little, but then your friends start wanting it a lot. Suddenly, they’re willing to pay a whole lot more for it, and you realize you could have asked for more all along.
Stocks are like those toys. Sometimes, people think a company is worth less than it really is, just because they don’t see all the good things the company is doing. Other times, everyone gets really excited and thinks a company is worth a ton, even if it didn’t seem like that before.
So, even though people thought Tesla was worth too much in 2018, it turned out they were wrong because the company did really well. This teaches us that what people think a company is worth (its stock price) can change a lot, and sometimes public opinion doesn’t get it right. Just like how your toy can become super valuable when everyone wants it, even if they didn’t want it before.
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