The company's sales fell for a second year in a row, as Tesla looks to AI and robotics, including a new $2 billion investment in CEO Elon Musk's company xAI.
Poor Lonnie. May he cry himself to sleep on his MyPillow tonight.
Investors had a general idea of what was going on at Tesla and thought their profits might be down to 20% of what they were last year, so prices went down before Tesla announced their results. Then the results came out. The results were terrible, but not as terrible as the rumours made it sound. So, share prices went back up a bit.
That makes perfect sense. Stocks are like gambling, where a lot of the bets make sense. This is like the odds on a sports game being very long before an injury report is released, and the odds getting slightly better after the injury report is released and it’s not as bad as feared.
Where TSLA stock makes absolutely no sense is the P/E ratio. That’s the price investors are paying for the shares compared to the earnings per share. An old, reliable company that probably won’t grow very much but that has reliably made a steady profit year after year might have a P/E ratio of 5. Tech stocks that might grow a lot in the future might have a P/E ratio of 20 because the expectation is that they have a lot of room to grow, and that in 5 years their revenues and profits might have tripled.
Tesla’s P/E ratio is currently 283.38, and its market cap is $1.386 trillion. So, Tesla investors somehow think that Tesla is going to grow to become hundreds of times its current size and/or massively profitable.
So, the day-to-day movements of Tesla’s stock price make sense in the abstract. Investors assuming bad news sell shares, when the news isn’t as bad as feared, investors buy shares. Where they make no sense at all is that the investors are somehow deluding themselves into thinking this tiny car company is about to do something to juice its share price to the moon, like inventing nuclear fusion, or perfecting a time machine.
This is the big thing. Tesla’s stock has never been valued based on what the company is or can do. It’s valued on musk’s image and how much value people believe that brings to the company.
His huge pay packages are likely because he knows that there’s a reckoning coming with the stock, and he doesn’t want to be a bag holder for his own company.
That’s one of the reasons why he lies constantly about what’s coming. Full self-driving, people on Mars, solar roof shingles. He has to keep pumping up the image, or the whole house of cards collapses.
The problem is, there is seemingly no end to his bullshit that people will gleefully swallow. I bought it for a while, I loved the idea of an idyllic future. Unfortunately, one must deliver on that at some point. I was always willing to to accept the bullshit on the premise that it would happen at some point. However he’s lost the plot to his own hubris and idiocy. Yet somehow, he’s still able to con enough people to prop (and grow!) his meme stonk.
People are remarkably dumb, yes. But look at last year alone. European sales tanked. Domestic sales sucked. People were vandalizing and burning his vehicles on dealership properties. He was literally tearing up on the news because no one likes him.
He isn’t immune to company devaluation, and he knows how dangerous that is given how much is tied to his garbage stocks.
Why do you think the pay package was so important right now? Folks this rich don’t need it, that’s why they get paid mostly in stocks with like $1 take home. Same reason Trump “donated” his salary. Optics when you can make so much more.
A dude like this would normally leverage stock to get low interest loans that they live off of and can write off.
A lot of people will shy away from Tesla permanently and his true believers are starting to crack.
I had this exact opinion when Amazon lost less money than expected in 1999. I’m sure people had similar opinions before 1929. This isn’t something new.
It’s worse than gambling. When gambling there’s risk and reward, but bad bets are still the responsibility of the player just like bets that outperform. In stocks, if someone makes a bet and/or the company misses their expected returns, the gambler can sue the company. It’s the only gambling where oops, all losses can still result in payoff for the player by fiduciary class-action lawsuit.
I played meme-stocks in 2020-21. I saw that bullshit first-hand, getting half a dozen emails after quarter misses about suing the company over their failure to meet projections. But half of those companies were just getting fucked with because of the influx of idiots like me doing silly shit with their money! I was blown away by that and suddenly started to see how fucked we were to do anything to stop the cancer that unregulated capitalism has become. Infinite growth, impossible in a finite system, is not only expected, but failure to return positive returns could be met with shareholders suing the company for line not go up high enough reasons.
If the decline was expected, that had already affected the stock price. If you look ONLY at what happens on the day that expectation is finally official, in writing, then yes it’s counterintuitive. But it makes perfect sense that if a huge decline was already built into the price, then that price would rise a little when it’s found out that the decline wasn’t as bad as expected.
Fucking stocks are like gambling. There’s no rhyme or reason to them.
Investors had a general idea of what was going on at Tesla and thought their profits might be down to 20% of what they were last year, so prices went down before Tesla announced their results. Then the results came out. The results were terrible, but not as terrible as the rumours made it sound. So, share prices went back up a bit.
That makes perfect sense. Stocks are like gambling, where a lot of the bets make sense. This is like the odds on a sports game being very long before an injury report is released, and the odds getting slightly better after the injury report is released and it’s not as bad as feared.
Where TSLA stock makes absolutely no sense is the P/E ratio. That’s the price investors are paying for the shares compared to the earnings per share. An old, reliable company that probably won’t grow very much but that has reliably made a steady profit year after year might have a P/E ratio of 5. Tech stocks that might grow a lot in the future might have a P/E ratio of 20 because the expectation is that they have a lot of room to grow, and that in 5 years their revenues and profits might have tripled.
For a typical car company that’s well run, a P/E ratio of about 5-10 is normal. Volkswagen is at about 8, Toyota is at about 10, Ford is at about 12.
Tesla’s P/E ratio is currently 283.38, and its market cap is $1.386 trillion. So, Tesla investors somehow think that Tesla is going to grow to become hundreds of times its current size and/or massively profitable.
So, the day-to-day movements of Tesla’s stock price make sense in the abstract. Investors assuming bad news sell shares, when the news isn’t as bad as feared, investors buy shares. Where they make no sense at all is that the investors are somehow deluding themselves into thinking this tiny car company is about to do something to juice its share price to the moon, like inventing nuclear fusion, or perfecting a time machine.
Especially a meme stock like tesla
This is the big thing. Tesla’s stock has never been valued based on what the company is or can do. It’s valued on musk’s image and how much value people believe that brings to the company.
His huge pay packages are likely because he knows that there’s a reckoning coming with the stock, and he doesn’t want to be a bag holder for his own company.
That’s one of the reasons why he lies constantly about what’s coming. Full self-driving, people on Mars, solar roof shingles. He has to keep pumping up the image, or the whole house of cards collapses.
The problem is, there is seemingly no end to his bullshit that people will gleefully swallow. I bought it for a while, I loved the idea of an idyllic future. Unfortunately, one must deliver on that at some point. I was always willing to to accept the bullshit on the premise that it would happen at some point. However he’s lost the plot to his own hubris and idiocy. Yet somehow, he’s still able to con enough people to prop (and grow!) his meme stonk.
Profits tanking by 46% Is it good indicator that he’s not immune to people waking up about reality.
The entire thing is a house of cards that will likely collapse when public sentiment fully dissolves.
One would think, but this has gone on way longer than I could ever imagine.
People are remarkably dumb, yes. But look at last year alone. European sales tanked. Domestic sales sucked. People were vandalizing and burning his vehicles on dealership properties. He was literally tearing up on the news because no one likes him.
He isn’t immune to company devaluation, and he knows how dangerous that is given how much is tied to his garbage stocks.
I want to believe. But, trillion dollar pay package.
Why do you think the pay package was so important right now? Folks this rich don’t need it, that’s why they get paid mostly in stocks with like $1 take home. Same reason Trump “donated” his salary. Optics when you can make so much more.
A dude like this would normally leverage stock to get low interest loans that they live off of and can write off.
A lot of people will shy away from Tesla permanently and his true believers are starting to crack.
Welcome to the vibe based economy.
EcOnOmIcS iS a ScIeNcE!
Stock prices are related to economics but aren’t the focus of the field.
“Surely our models are more true than the laws of nature.”
I had this exact opinion when Amazon lost less money than expected in 1999. I’m sure people had similar opinions before 1929. This isn’t something new.
It’s worse than gambling. When gambling there’s risk and reward, but bad bets are still the responsibility of the player just like bets that outperform. In stocks, if someone makes a bet and/or the company misses their expected returns, the gambler can sue the company. It’s the only gambling where oops, all losses can still result in payoff for the player by fiduciary class-action lawsuit.
I played meme-stocks in 2020-21. I saw that bullshit first-hand, getting half a dozen emails after quarter misses about suing the company over their failure to meet projections. But half of those companies were just getting fucked with because of the influx of idiots like me doing silly shit with their money! I was blown away by that and suddenly started to see how fucked we were to do anything to stop the cancer that unregulated capitalism has become. Infinite growth, impossible in a finite system, is not only expected, but failure to return positive returns could be met with shareholders suing the company for line not go up high enough reasons.
It’s so messed up.
If the decline was expected, that had already affected the stock price. If you look ONLY at what happens on the day that expectation is finally official, in writing, then yes it’s counterintuitive. But it makes perfect sense that if a huge decline was already built into the price, then that price would rise a little when it’s found out that the decline wasn’t as bad as expected.
Thats how its supposed to work.
That is absolutely not how it actually is working.
So, 2+2= whatever the hype says it is. Got it.