
No Rational System Would Value Tesla at $100B - jrepinc
https://jacobinmag.com/2020/01/tesla-stock-price-elon-musk-financialization-capital
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holler
So, according to the author, a PhD in Sociology, Elon Musk is a "Snake Oil
Salesman" and the "irrational" share price of TSLA is case for "democratizing
the allocation of wealth" or as she puts it "socializing finance". Umm, no,
that's not how it works in a free market and free society. People can do
whatever they please with their own dollars, including risking them on a
stock.

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jml7c5
>Umm, no, that's not how it works in a free market and free society.

I believe she is advocating moving away from (though to what degree I am
unsure) a free market and free society.

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rumanator
> I believe she is advocating moving away from (though to what degree I am
> unsure) a free market and free society.

The whole publication advertises itself as"a leading voice of the American
left, offering socialist perspectives on politics, economics, and culture."
It's a blog dedicated to publish socialist/communist rethoric. It's no
surprise an article published through it is dedicated to defend the idea that
they have the right to dictate how someone else's money should be spent.

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ggm
I agree about the headline, but the article doesn't show it, or even plausibly
point to it: it's just an assertion.

The underlying question about p/e would have been more interesting. And, she
didn't seem to understand the economics of the battery relationship with
panasonic

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wedn3sday
Although I agree with the underlying assertion, namely that TSLA is over
valued, the author somehow manages to avoid making a single credible argument
in the entire article. I find it somehow ironic that she decries investors as
being, "not interested in the things we need for long-term development" and
that "While the masters of the universe play the odds, the rest of us are
scrambling, trying to figure out how to slow down the looming ecological
catastrophe" while deriding a company thats pushing the envelope of electric
vehicles and battery production, two things critically needed to move away
from fossil fuels.

How is it possible for someone with a PhD to write an article about the market
value of a company and not have a single sentence about the P/E ratio, cost of
production or unit sales?

"They demonstrate the absurdity of a system in which the value of companies
rests as much (or more) on their ability to tell a good story as it does on
their actual track record." Ummmm, what? What the heck is even the difference
between "telling a good story" and a "track record"? A track record is just
one ingredient that people use to try and project how a company will perform
in the future, i.e. part of trying to "tell a good story." Im a hard-core
leftist, socialist, and generally enjoy the commie rag that is the Jacobin.
This article is trash and the author should be ashamed to have her name
attached to such low effort nonsense.

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rumanator
> How is it possible for someone with a PhD to write an article about the
> market value of a company and not have a single sentence about the P/E
> ratio, cost of production or unit sales?

Quite bluntly, a PhD only means that the person was able to defend a thesis
against a selected group of experts on a specialized academic subject that
they studied for years. That doesn't mean the person holding a PhD is
competent in any field outside the niche topic they studied for years just to
have a single argument.

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thedudeabides5
Echo the other comments.

“I don’t like the valuation so let’s socialize capital” seems inane,
especially when co palomino about ecological catastrophe in the context of an
article about electric cars.

Don’t like the share price, short the stock. Something you can do in the
democratic west and can’t do in Soviet Russia or CCP China (I know I’ve
tried).

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bryanlarsen
Counterargument: Tesla's P/S ratio is 4.

One can argue that's inappropriate or high, but one cannot argue that "no
rational system" would ever consider a Tesla P/S ratio of 4 to be irrational.

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smarijerry
Worst article I've ever read. It makes a click bait claim and backs it up with
literally zero evidence, analysis, and numbers. The one time it mentions a
number of any kind is "Tesla’s scheme to have its customers — who have paid
upward of $90,000 for their cars — rent them out as self-driving taxis during
the day while they are at work is pretty implausible." Again, why is it
implausible? No reason given.

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pasttense01
I think that many of us assumed that even though Tesla was the early
innovator, that the traditional car manufacturers would rapidly overtake Tesla
--because of their manufacturing skills, much more extensive dealer base,
brand loyalty, etc.

But this hasn't happened. And since many of us think EVs are going to become
fairly prevalent, this means Tesla is worth very serious money.

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vearwhershuh
We do not have a rational monetary system, so expecting rational valuations in
the terms of that system is not rational.

What is the present value of any revenue stream if you think that interest
rates are going to be negative in real terms for the foreseeable future?

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gpapilion
I think there is some truth to the argument that the sum total addressable
market and revenue from Tesla will not justify their current valuation. It
would not surprise me see a drop in their market cap in the near term.

That said, the market can remain irrational long than you can remain solvent.
(In almost all cases)

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brianwawok
If they solve self driving they are undervalued. If they own the only self
driving solution, they own the transportation industry.

If they patent a new battery technology, they could end up being undervalued.

If they are just a car company they are likely overvalued.

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RandomInteger4
No rational thinker would give any credence to words written in a "full
communist" magazine about how a system of economics should be run.

