The fascinating thing to me is that if you bring Tesla valuation up the response is "lol dumb short seller, prepare to lose another X billion this year!".

Tesla's most valuable product definitely isn't anything made in a factory or produced by their programmers, it's the financial cult that has amassed around it. It's people who are putting every penny of their money on Tesla calls and spending every hour of their day making sure to spread the good news of Tesla and metaphorically stoning anyone who dares speak against Elon Musk.

This will almost certainly not end well at some point, especially since the valuation exceeds even a scenario where Tesla becomes a global monopoly in a number of industries. How long will it take for the cult to realize this? Maybe never.

> making sure to spread the good news of Tesla and metaphorically stoning anyone who dares speak against Elon Musk.

That's an interesting take. Even if true today, does not reflect the historical reality at all; in fact I remember quite the opposite: for the majority of the history of the company I remember hearing that he is a clown, Tesla will go bankrupt, the product won't work, false stories on the product by major newspapers, the product won't make money, the factory won't scale.

Elon is a clown; sued for libel and by the SEC; Elon has admitted the company was weeks away from bankruptcy during Model 3 development; my Tesla was a lemon, Tesla makes almost all of its profits from regulatory credits; 500K production was only achieved by creating a second factory (not part of the original 500K projection); the Gigafactory is only 30% done and Tesla has abandoned it in favor of expansion with third party battery manufacturers.

So, in all, pretty accurate.

Point is there is (or at least was as of 1.5 years ago) way more negative coverage of Tesla than positive, accuracy aside, which contradicts GP's take. There's been enough outlets to show the bad side and it was the most shorted stock which proves the point.

At what point do you believe your statements are delusional if not when Musk has become to wealthiest person in the world, Tesla one of the most valuable companies by market cap, and the world bends over backwards to get their factories in their backyard or get their cars in their garages?

Elon will set foot on Mars and you’ll still have the delusional yelling Tesla is a farce I suppose.

I am trying to take a balanced view on this, from both sides (long/lovers and shorts/haters), based on some preliminary research.

Please correct/add if I am wrong/missing details. So far some things to be taken into consideration:

1. Investors

To be fair, Tesla received bad press before Cathy Wood's predictions came true and decimated all short sellers, leading to a short squeeze (major bull contributor)

- Car market: Stock price makes sense based on Ark's predictions, at least for now. Taking into account total addressable market (TAM) and market cap, Tesla's seeming monopoly with its 3-4 year lead on technology compared to all other competitors.

- It makes sense how investors are valuing Tesla to include all ICE companies, betting on Elon's probability to capture this market (Market cap -> TAM bet) This is not including additional speculative TAM (insurance, energy, self-driving, etc.).

Max bull case based on ARK's 7k prediction = 7k/5 (stock split) = 1.4k price target

- Governments are going to start banning ICEs by 2035. So the EV trend is definitely happening.

2. Consumers

- Product: Customers reviews and product seem solid. Value proposition to prospective new customers also make sense in terms of saving on gas long term compared to electricity.

- Hype: Yes, there is a cult around Elon, and defects or abuses get overlooked in favor of Tesla

Biased (shorts): https://news.ycombinator.com/item?id=25360432

- Supply: There might be a problem with cobalt supply due to its majority based on Democratic Republic of Congo. Ethical issues aside (child and forced labor)- One tesla contains ~4.5 kg of cobalt, compare this to global electronics' demand, there will be a big shortage (Glencore collaboration).

Elon is working with CATL do develop new batteries that get rid of cobalt, but this is a long shot, and even if realized, efficiency with a new tech is at stake.

- Demand: There is no doubt current market demand for EVs crossed an inflection point where consumer education is maturing due to Tesla. But most current customers are catered toward the rich (Boomers and Chinese).

- There is some research suggesting that millennials (Tesla's next biggest target) don't want to own a car (depreciating asset), let alone afford one- given current economic situation, home ownership (charging), and remote work. Tesla' promise on the $25k car might help here. But they are also the major fans and Robinhood investors in Tesla...

Not sure, overall I am glad that Tesla is forcing other companies to follow its lead, but a level headed approach is always good advice.

Note: I don't own a car or Tesla stock

*should add:

- Tesla’s TAM: https://blog.nvstr.com/what-is-tam-and-why-is-it-critical-to...

- The “rich” buying Teslas also include tech and other high earning workers- including millennials (as exception to the demographic trend)

- Supply: Not only cobalt but chips shortage https://news.ycombinator.com/item?id=25686248

- Pandemic caused real state boom out of cities to suburbs and remote work trend might help Tesla (home charging).

Fear for public transport, for using gasoline stations and shared drives could change consumer EV ownership views

My impression is that aside from some crazies who generally get downvoted unilaterally, you rarely see antagonistic opposition to saying Tesla is overvalued. This doesn't hold if you instead make a meta observation that claiming it's overvalued would earn antagonism.

It's not that surprising. The former is voicing an opinion. The latter is effectively just a pre-emptive insult to everyone who disagrees with you.

Similar arguments hold for any popular unpopular opinion.

You might be thinking too small. The USD derives much of its value from the 'petrodollar' deal from the 1970s. Tesla is set to replace oil, so maybe the USD itself will be backed by Tesla.

Don’t know why this obvious satire was downvoted.

Poe's law

> Who else feels like the TSLA price is a gigantic bubble at this point? Not that it's not valuable or worthy of some of the growth it's seen, but

It's a classic "there will be a greater fool down the road" theory, like the tech companies that proclaim they will never issue a dividend (in which case the only reason for buying the stock is that you believe someone else will buy it later).

The correction will be painful for all concerned. An overlarge market cap isn't really that great. Sure, for a while you can raise capital extremely cheaply and that's nothing to sneer at! But it leaves a couple of problems: when it's big it's harder for it to grow, while a smaller mkt cap leaves more room for growth. And people are buying growth. The other problem is that it traps the leadership. 20 years ago when Time Warner bought AoL there was much discussion in the press about the various business logic/synergies (or lack thereof) between the two businesses. But really the primary motivation seemed much simpler: the only way that Steve Case could retire (without cratering the stock price) was to sell/merge the company into another entity of at least similar size. Tesla can't merge with any car company, or many other companies for that matter.

As for the shorts:

A couple of years ago my kid worked for a billionaire with whom he remains friendly. The other day he joked to me, "My greatest respect for XXX is that he is the only person I know who has made money shorting Tesla"

I remember Musk tweeting that the price was too high back in May when it was a fraction of what it is now. (https://www.cnbc.com/2020/05/01/tesla-ceo-elon-musk-says-sto...)

We are going to live in a low rate world for a long, long time. Cheap money means time horizons get expanded. This is the perfect environment for "moonshot" stocks because investors don't care if you say it'll take 8 years to make your first dollar (looking at you, QuantumScape)

Amazon has been priced at 100p/e for like 20 years. Tesla is at 1000+ but markets can price things at high ratios for a while.

Amazon is arguably operating very anti-competitively. That justifies the p/e. What could possibly justify 1000+ for Tesla? Its like the zombie towers in world war z, just pure brainless masses of dummmm money.

The craziest thing is that TSLA was in an anti-bubble just 2 years ago, with the price clearly suppressed far below a reasonable valuation. Now it's even farther from reasonable. Something about TSLA just makes people lose their minds in both directions.

> Who else feels like the TSLA price is a gigantic bubble at this point?

It's close to being a TRILLION dollar company. Think about it. It's so mindboggling. But then again, I felt that amazon was a gigantic bubble forever too.

I've said it before and I'll say it again: at this point tesla is going to be spectacular one way or another. It's been bid up to such an extreme degree that it can't tread water. So in 2030, we'll look back and be amazed at what Tesla has become no matter what.

A ton of short sellers that have so far lost that bet handily.

"The market can stay irrational longer than you can stay solvent". This is nothing new.

I love Tesla but when even Musk himself looks at the stock price and tweets "LOL, stonks", you know something must be off.

Just because something hasn't happened yet, doesn't mean it will never happen. Tesla is doing extremely well and has a bright future but it's hard to make a solid argument for its current valuation.

Yeah i didn't mean to imply that the bubble assertion was false, merely point out that a ton of people also think it's a bubble (and have for years), and so far have paid a huge price for that bet.

It's a bubble for a reason, you can't short sell you can only watch it pop.

The market can remain irrational far longer than you can maintain liquidity.