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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You have to realize stock prices are completely arbitrary.
It’s a piece of worthless share which one person has, and someone has to agree to buy it at $xx price.
A company can be thriving, doing well, yet their stock prices can essentially be $1. The inverse is also true.
This just means that you can have a pile of shit, and someone is willing to pay you thousands of dollars for it. Do you care? You shouldn’t, cause although it’s worthless to you, someone values it.
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That being said, stock prices have no bearing. So, what do professionals do? They compare it to their peers. Somehow, people all around the world have in the minds that the automotive industry should cost around $20/share. Ford could be $19, Toyota could be $20, but whatever they are, it’s around $20 (or at least close to it).
All the sudden, this new car company less than 20yrs old, which often is worth less than $20 cause they’re new, is worth $100, which is 5x the amount.
Let that sink in.
Toyota/Honda/Ford/VW,etc. have been around for decades, they’re reliable, trustworthy, have proven record, and continues to be successful, all the sudden this teenager is worth 5x their worth. 5x of $1 is $5, so it’s not much. But when others are worth $200B and this noob is $1T, that’s a whole lot of 0’s..
Kinda bonkers.
But, like I said – the price is arbitrary. The majority of people that play the stock market is willing to pay that much. Some people think Tesla is a pile of shit, but others think there’s gold underneath it waiting to emerge. I guess majority think there’s gold.
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