Friday, January 1, 2021

Tesla Mania!

It was manic year for financial markets and nothing exemplified the the fear, greed and absurdity of the stock market better than Telsa Inc. The automaker's shares went on a tear in 2020, resulting in Telsa becoming not just the highest valued car company in the world by far (even without selling a lot of cars), but also the one of the biggest companies in the world outright. And Elon Musk became the second richest person on earth.

At the same time, the chart below highlights the divide between Tesla's sky high valuations (PE of 1,398) and its fundamentals:


Tesla has a bigger market value than the leading car companies combined. Yet, Tesla sold just 367,500 cars in 2019 and generated $25 billion in revenue compared to 40.5 million cars sold and $1.1 trillion in revenue generated by those same manufacturers. There's growth expectations and then there's whatever this is...but I'm in. The stock market is a casino now and Tesla is its biggest slot machine.    
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