
Ask HN: Why is Tesla worth $420B? - xoxoy
Stock is trading at all time highs but it’s delivery numbers seem to be roughly the same over the last 6-8 quarters or so.<p>It’s now more valuable than Johnson &amp; Johnson and Visa.<p>What’s going on here?
======
one2know
Because capital is free right now just not to people and companies who don't
already have a lot of it. Fed is spraying cash all over the country clubs and
gated communities. Where are they going to put it? Highly visible stocks of
large companies.

~~~
Serious_Cheese
> Fed is spraying cash all over the country clubs and gated communities

Can you please elaborate on this? How exactly is this happening? Why
specifically country clubs and gated communities?

~~~
whyhow
He doesn't literally mean country clubs. He is saying that the fed's current
policies allow rich corporations (controlled by rich people) to get loans at
very low interest rates.

------
allears
Investors look for a stock that will appreciate in value. Not all investors
look at actual sales or revenue figures (obviously). It's called the Greater
Fool theory. It's smart to buy something overpriced if you can resell it to an
even greater fool at a profit.

------
runawaybottle
I really think China has a lot to do with it. If Tesla is going to sell a lot
of EVs anywhere, it’s going to be China (and by a lot I mean the only
conceivable market pushing for electric that could possibly justify that
market cap).

The bet is they can sell about 4 million cars in China, I think. That can
justify the 200 billionish projection.

Toyota sold something like 10 million cars globally in 2019. If Tesla really
is the best electric car people want, it should just be a matter of ramping up
production.

Edit: My numbers were all based on 200 billion valuation mistakenly, so just
double everything.

~~~
lmedinas
I doubt at this point China wants to buy anything american. Plus Tesla does
not have a good history of production neither quality.

------
samfisher83
Its worth more that gm, ford, Chrysler, and toyota combined. I am not sure
what year they will make more cars, revenue, and profit than all those
companies combined.

~~~
adventured
It's actually going to soon be worth more than all the major automakers on
planet Earth combined. At the rate it's going, it'll hit that mark within a
month or two.

That includes: VW, Porsche, GM, Ford, Daimler, BMW, Toyota, Fiat Chrysler,
Honda, Hyundai, Nissan Renault, PSA, Suzuki. Combined.

Regardless of however long the ongoing stock market mania lasts, it's
obviously going to obliterate a large number of shareholders on the way back
down. There is no scenario where Tesla can fill in even a modest amount of
that market cap.

Toyota is their absolute most extreme best case scenario. Toyota is worth less
than 1/2 what Tesla is today. It would take decades for Tesla to get as large
and profitable as Toyota if everything works out perfectly.

~~~
taf2
I believe the reason for the extra valuation of tesla is factoring in the
potential of self driving cars and the market they can capture currently held
by uber/lift - also the energy storage market and the solar market...

So while they sell cars and that is the majority of what they are known for
now... it’s believed in the future they will be worth more because of the AI
and storage businesses

~~~
lmedinas
i think the main reason, as a follow up of your opinion is that Tesla is a
technology company first and automaker second. This gives a huge potential to
sell services that are unique/very specific that are tremendously expensive.
Im talking about Cells/Battery technology, AI, Autonomous driving,
Infotainment devices, Internet of things, Chargers etc... etc...

I think at this point the only Automaker that can follow up Tesla could be
Toyota or VW.

------
thorin
Essentially because investors are desperate for growth and Tesla is one of the
few non-social media / cloud companies that promise massive growth potential.
This is largely driven by Musk, in the same way as Jobs was able to drive
Apple. Tesla have a long way to go if they make the right moves.

------
giantg2
Because a sufficient number of people say it. That's pretty much the way most
things in a free economy are valued.

------
tuyguntn
Because lots of retail investors (average people like you and me) from
Robinhood app are willing to buy stocks. Good marketing and branding around
Elon Musk.

With 420B market cap Tesla is worth more than Walmart who had 14B profit last
year (half of whole Tesla 2019 revenue) and 500B revenue (20x of Tesla
revenue)

------
rdtwo
High speculative demand and low security availability. Similar to why bitcoin
is worth 12k a coin.

------
Miner49er
It's a bubble.

------
logicslave
It's the apple of cars.

~~~
samfisher83
Apple generates like 60 billion in cash. That is 3x revenue of tesla.

------
smarri
r/wallstreetbets is a good place to investigate this.

------
Trias11
Lots of people are speculating on direction of securities.

It has nothing to do with true or real value of underlying company

------
markus_zhang
Use your imagination my friend. And throw weak dollar and low rate on top of
that.

------
doopy-loopy2
People believe the company will be worth more in the future.

~~~
Trias11
People beleive more people will buy the same thing they bought after they
bought it

~~~
quickthrower2
People believe “YOLO”

------
scott31
Saudi money

------
thiago_fm
As a fundamental analysis investor, I find it so silly, it isn't even worth
1/10 of it. But those kind of movements happen every once in a while and I've
learned to live with it and just observe.

The reason that it's happening?

So, one part of it is government driven: 0% rates, FREE MONEY, money printing
press goes BRRRRRRRRRRRRRR.

Now for Tesla, it's the kids. The same that popped up cryptos through the roof
in 2016-7.

Nowadays they are at r/wallstreetbets using robin hood.

Institutional investors are enjoying the ride as well.

People aren't also questioning FAANG and MSFT huge market caps without the
same growth in the bottom line. Sure,, those companies are doing well, but
they valuation rose much higher than they are able to give returns to its
investors.

It's the same problem. I have 0 positions on those stocks because they are
like cocaine for the mind and this will all eventually crash. Gold and real
things are your best bet.

If it doesn't crash now, it means that there'll be a huge debasing of the
dollar to match those valuations. There's just too much money in the economy
and very little being produced.

I believe what we may see is that the dolar vs other currency pairs will
devaluate a lot, meanwhile inflation will remain low for a little while and
then it will hit everybody very hard, because it means for every imported good
Americans will need to pay much more.

FED has a huge issue that it can't hike up interest rates or start cleaning up
his huge balance and when inflation comes for real(not the 2% they expect, but
more like Argentina style inflation), they won't be able to lower that
inflation without literally stopping the economy.

It's as if QEs are hiding dust under the carpet to make the house look clean.
Initially, it indeed looks clean and there's no impact. Even after a while it
is still fine. But now there's like a mount everest of dust and the carpet
can't hold it any longer. Once shit hits the fan, all americans(and western
people) will feel it.

Americans like to believe in the fallacy of the reserve currency. Currency is
currency. Every single currency can end up having huge inflation and turning
to dust if enough money is printed. US has been able to get around having this
problem because so many countries are dependent on it, but there's a limit and
the writing is on the wall that this limit has been already reached. And when
countries stop relying on US Dollars as it suffers too much debasing and can't
be reliably used for trade anymore, the country we know as USA will just
implode, because it's only real product it exports is the Dollar, which will
be worthless.

World Economy will shift to China and Asian countries which produce most of
the shit western economics consume and we'll have a new world order. It's
about time.

~~~
Serious_Cheese
Since the FED lowered interest rates to zero and started buying corporate
bonds [0], I predicated dollar inflation would rise. How should someone like
me (a blue collar working lower class) prepare for the storm? Should I invest
in stocks? Buy property? Buy things like cars? How should I prepare for what's
about to come?

It might seem speculative, but OP's comment is based on how economics works,
so the storm is about to hit. The big question is when? And how should we
prepare?

[0] [https://www.cnbc.com/2020/06/29/the-fed-is-buying-some-of-
th...](https://www.cnbc.com/2020/06/29/the-fed-is-buying-some-of-the-biggest-
companies-bonds-raising-questions-over-why.html)

