Re:Elon Musk becomes world’s richest person as wealth tops $...
by gumby on Thursday January 07, 2021 @01:40PM
(#25675269)
> 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"
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"