Grotesque stock valuations for companies.

[acbytesla]

I strongly believe that capitalism today is ridiculous in the most obscene way. Nowhere is this insanity seen more clearly than in the various evaluation of some companies. I thought this was true about Enron in its hay day. Tesla is a prime example today with its almost 400 to 1 P/E ratio. But another is the billion dollar valuation of Rivian's new bicycle spinoff Also. Ebike startups have been going bankrupt at an insane rate, and they're valuing this chis company selling premium ebikes for a billion dollars? Get real.

Any comments about the valuations of Tesla, Also or other overpriced companies?

 

[dirtywick]

yeah, there's this thing called passive investing, it's really simple, you buy or you sell on a market weighted index fund. the more market share you have of the index, the more cash you get from every passive investment on that index, which is roughly 60% of investment in the market today. then there's the algorithmic investment of hedge funds at the like, that simply monitor chart trends and try and find opportunities.

so you see how few investment dollars are being allocated due to analysis and fundamentals?

ok, so if you're a giant company, and you can get your stock price up high enough to get a big enough market share, you just get infinite amounts of free money. to do things like build whatever stupid idea you have, like robots or data centers in the middle of the desert. and everyone has no choice but to keep handing you money because the algorithms are telling them to do that, and they have to cheer for it because everything is riding on it being correct.

 

[acbytesla]

yeah, there's this thing called passive investing, it's really simple, you buy or you sell on a market weighted index fund. the more market share you have of the index, the more cash you get from every passive investment on that index, which is roughly 60% of investment in the market today. then there's the algorithmic investment of hedge funds at the like, that simply monitor chart trends and try and find opportunities.

so you see how few investment dollars are being allocated due to analysis and fundamentals?

ok, so if you're a giant company, and you can get your stock price up high enough to get a big enough market share, you just get infinite amounts of free money. to do things like build whatever stupid idea you have, like robots or data centers in the middle of the desert. and everyone has no choice but to keep handing you money because the algorithms are telling them to do that, and they have to cheer for it because everything is riding on it being correct.

I'm sure that's a reason for Tesla. But not for Also. To be fair, Also isn't a stock valuation. It's a VC estimation of the IPO value for the company they invested 200 million. We'll see what it opens at. From my perspective, this reminds me of Segway. Another mobility company hyped only to go splat.

 

[The Atheist]

Any comments about the valuations of Tesla, Also or other overpriced companies?

Fundamentals don't matter any more.

Valuations are based on what someone is prepared to pay.

 

[TragicMonkey]

Everything works out fine until someone makes a big deal about how everything is just the same few companies exchanging imaginary money. Then the bubble pops and everyone dies.

 

[acbytesla]

Fundamentals don't matter any more.

Valuations are based on what someone is prepared to pay.

The ebike they're selling does have some cool features, I just don't seeing a large number of people wanting and willing to spend $3500 to $6000 for those features when good ebikes can be bought for 1/2 to 1/4 the price. The features IMV are not worth the premium. Plus IMV, it also looks weird. This valuation seems more to do with Rivian's involvement than it does good financial principles.

 

[acbytesla]

Fundamentals don't matter any more.

Valuations are based on what someone is prepared to pay.

The ebike they're selling does have some cool features, I just don't seeing a large number of people wanting and willing to spend $3500 to $6000 when good ebikes can be bought for 1/2 to 1/4 the price. IMV, it looks weird. And while I think how it looks is secondary to its usefulness and how it rides, looks matter a lot. Few people want to look like a dork.

I simply can not see many people paying this much for this bike.

 

[The Atheist]

IMV, it looks weird.

I'd never seen one until I looked them up in response to your thread.

I think they look ok, but I wouldn't ride one myself.

 

[Brainster]

Tesla's valuation does seem based on the prior sales growth rates, which were spectacular and could not continue. Indeed their sales have been stagnant the last three years although they have managed to keep costs down so they still have pretty amazing margins for a company that big. And they still have an astonishing amount of cash on hand, something that has stood out for years as a red flag to me.

Dunno about ALSO; I'm a huge e-bike fan and the problem with the $1000-$2000 bikes is they don't last much past the warranty period. OTOH some of the stuff ALSO spouts sounds like "we have an app." I also note that their bike doesn't have a chain or regular bike gears--it's all e-powered, even though supposedly your pedaling does generate some of the electricity (as does braking which is an excellent feature). This is a little tricky to explain but each level of your e-motor has a bicycle gear that you will feel comfortable using. On mine, if I am in third gear on the e-bike, I need to be in seventh gear on the regular bicycle--otherwise I will feel as if I have too little control over the speed of the bike. Still, a billion-dollar valuation isn't that shocking anymore.

 

[The Great Zaganza]

If you assume that a company will grow to cover the entire galaxy and exist for eternity, then no evaluation is too high.

The current market values are based on a shared pretence at Big US Companies will live forever.

 

[Darat]

Fundamentals don't matter any more.

Valuations are based on what someone is prepared to pay.

I'd say it isn't really even about what someone is willing to pay, it is the result of giving gamblers unlimited credit at a casino. Viewing the "stock market" as gamblers gambling with other people's money explains everything we see about the stock market.

 

[dirtywick]

I'm sure that's a reason for Tesla. But not for Also. To be fair, Also isn't a stock valuation. It's a VC estimation of the IPO value for the company they invested 200 million. We'll see what it opens at. From my perspective, this reminds me of Segway. Another mobility company hyped only to go splat.

it’s even more true for the spacex ipo, open ai, and a few other companies with high valuations that promise to turn a profit in the future

there’s too much cash and not a lot of good options. plus it’s never been easier to get into the market, just download an app. good financial advice is invest in an index fund, time in market beats timing the market.

the problem remains that there’s a lot of dumb money in the market, and that’s a relatively new thing.

 

[P.J. Denyer]

it’s even more true for the spacex ipo, open ai, and a few other companies with high valuations that promise to turn a profit in the future

there’s too much cash and not a lot of good options. plus it’s never been easier to get into the market, just download an app. good financial advice is invest in an index fund, time in market beats timing the market.

the problem remains that there’s a lot of dumb money in the market, and that’s a relatively new thing.

Not that new, it was the problem in the 1920s too and look how well that turned out.

 

[dirtywick]

https://www.apolloacademy.com/wp-content/uploads/2024/11/Passive-Investing-Paper-vF-112224_STAMPED.pdf

here's some information about the active vs passive investment share of the market. just from 2012 to 2024, the time period of the paper, passive investment has gone from roughly 25% to over 50%. and if you go back further, like the last 30 years, that trend remains the same.

so as it pertains to this type of investment, which is an increasingly bigger strategy, if you can get listed on an index fund and if you can get a high valuation, you'll get a bigger piece of every dollar coming into the market this way. further, if you can get your stock price to rise, the hedge funds that only buy and sell off trends might start pumping money into your stock as well. none of these investors care you're selling a luxury e-bike an operating at a loss because nobody is even looking, and that is increasingly true as the share of active investors begins to shrink.

but the question then is what happens when enough passive investors start pressing sell instead of buy.

 

[Rolfe]

I've just ordered a new e-bike and I'm awaiting delivery, so I was interested in this. It's not relevant to Europe of course, but I'd be surprised if it caught on in a big way. I wouldn't even consider it.

 

[acbytesla]

Tesla's valuation does seem based on the prior sales growth rates, which were spectacular and could not continue. Indeed their sales have been stagnant the last three years although they have managed to keep costs down so they still have pretty amazing margins for a company that big. And they still have an astonishing amount of cash on hand, something that has stood out for years as a red flag to me.

Dunno about ALSO; I'm a huge e-bike fan and the problem with the $1000-$2000 bikes is they don't last much past the warranty period. OTOH some of the stuff ALSO spouts sounds like "we have an app." I also note that their bike doesn't have a chain or regular bike gears--it's all e-powered, even though supposedly your pedaling does generate some of the electricity (as does braking which is an excellent feature). This is a little tricky to explain but each level of your e-motor has a bicycle gear that you will feel comfortable using. On mine, if I am in third gear on the e-bike, I need to be in seventh gear on the regular bicycle--otherwise I will feel as if I have too little control over the speed of the bike. Still, a billion-dollar valuation isn't that shocking anymore.

That's simply not true, it might be true about the $500 ebikes at Walmart. But not most $1500 to $2000 ebikes. The differences I see between them and the premium $3000 to $6000 bikes is weight. In fact, the problem I see with the premium bikes is they are so unique you have to buy components that are one off and unique only to that bike. Which means when something breaks you have to have them repair it or buy overpriced components from them.

 

[acbytesla]

More about the insanity of the sham which is the corporate stock system

Which is more? The amount of earnings Elon Musk has made selling Tesla stock? Or, the total amount of profit Tesla corporation has generated since its IPO sixteen years ago?

The amount Elon Musk has made 39 billion US dollars selling about 10 percent of his Tesla holdings. While Tesla' has generated 35 billion dollars in total earnings in the 16 years since the initial public offering. FYI: Musk still holds about 250 billion of Tesla stock

 

[Trausti]

More about the insanity of the sham which is the corporate stock system

Which is more? The amount of earnings Elon Musk has made selling Tesla stock? Or, the total amount of profit Tesla corporation has generated since its IPO sixteen years ago?

The amount Elon Musk has made 39 billion US dollars selling about 10 percent of his Tesla holdings. While Tesla' has generated 35 billion dollars in total earnings in the 16 years since the initial public offering. FYI: Musk still holds about 250 billion of Tesla stock

If you think the valuation is wrong, just don't buy the stock. For lots of people, the stock market is irrelevant.

 

[acbytesla]

If you think the valuation is wrong, just don't buy the stock. For lots of people, the stock market is irrelevant.

It's not that simple. It costs society in so many ways, The amount of money a single human being has been compensated because of this moronic valuation is enough money to build a transit system in a dozen US cities.

 

[Trausti]

It's not that simple. It costs society in so many ways, The amount of money a single human being has been compensated because of this moronic valuation is enough money to build a transit system in a dozen US cities.

It's not your money. It's private money. Malicious envy is no way to live a life, dude.