No Rational System Would Value Tesla at $100B(jacobinmag.com)
jacobinmag.com
No Rational System Would Value Tesla at $100B
https://jacobinmag.com/2020/01/tesla-stock-price-elon-musk-financialization-capital
20 comments
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.
>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.
I believe she is advocating moving away from (though to what degree I am unsure) 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.
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.
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.
mrr54(2)
I believe that if you asked the author they would tell you that free markets have nothing to do with 'free society.' I also highly doubt the author (and probably even you) believe that people should be able to do whatever they please with their own dollars.
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
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
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.
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.
> 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.
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.
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).
“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).
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.
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.
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.
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.
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.
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?
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?
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)
That said, the market can remain irrational long than you can remain solvent. (In almost all cases)
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.
If they patent a new battery technology, they could end up being undervalued.
If they are just a car company they are likely overvalued.
No rational thinker would give any credence to words written in a "full communist" magazine about how a system of economics should be run.