The stock market is over 60% passive investment, it's starting to get unmoored from the financial realities of the underlying companies. What that means for the future is [shrug emoji].
replyThe price changes are not being driven by the passive investors though. People did actually decide to put all that money into Tesla.
reply>Does the financial markets still expect them to far out-earn Volkswagen and Toyota any time soon, we've been waiting for like a decade already??
replyThese capital heavy industries operate on 30+ year timelines, a decade isn't sufficient time.
Revenues are not the end all, be all. Profit and profit margin, along with revenue trends provide a more complete picture. And the most significant factor is that the market does not expect Volkswagen or Toyota to do anything new, to do anything with the potential to earn more. They are what they are, and they will continue with their lower margin businesses until they fade away.
Investors are betting that Tesla, however, might have a few tricks up its sleeve, that will allow it to expand markets and profits.
They currently seem to have the opposite of tricks up their sleeve, resulting in their sales in Europe either dropping sharply or stagnating...
replyLook at profit rather than revenue - "it's easy to make a lot of revenue when you're selling a dollar for 80 cents" applies just as much to big legacy automakers as it does to startups.
replyThe traditional car makers have had a hundred years to learn how to make profit by selling cars. What evidence is there that Tesla knows something they don't and has profit margins higher than they have??
replyStock market is about expected future returns. Tesla probably won't ever be very good, but it has the chance to regulatory capture the entire US market in a way that Volkswagen doesn't. Tesla gets to market overpriced junkboxes to rich people in a way that Volkswagen doesn't. Tesla has a likelihood of acquiring lottery-ticket companies like xAI in a way that Volkswagen doesn't. This stuff doesn't happen when your company just focuses on making cars.
reply