Tesla’s valuation is completely detached from the reality of the business fundamentals. It can never achieve, through revenue generation, its current valuation (in constant dollars).
While Elon’s pay package is ridiculous, I think it’s entirely true that almost all of the value in Tesla is Elon’s unique ability to attract retail investor simps to pump the stock. Without Elon, Tesla’s valuation would plummet to a more reasonable multiple on revenue.
So I get massively overvaluing Elon Musk– it’s an admission that you don’t own a company, you own a meme.
For a long time, capitalism has had a fundamental idea of contracts. We let people buy Tesla stock because they are doing so without any coercion, being told time and time again that there’s no guarantee of returns, and so they can freely participate in that exchange. There’s some idea that some people are idiots, some people are smart, some people are smart but wrong, and some people are idiots but right, and together they can balance each other out to “discover” the true exchange value. And for the most part this works. There are times that individual stocks or the market as a whole gets out of whack, but corrections happen eventually and on the whole things operate in a sane way.
The rise of crypto tokens (I refuse to call it an asset or a currency), online sports gambling, and Robinhood-like gamified stock investing has really stressed my belief that this system can work. There aren’t just a few addicts being harmed. There aren’t small wins and small lessons being learned out there. I sincerely believe the entire economy is partially out of whack because of how investing is being done right now. The AI-bubble feels like it’s just the tip of the rot that has slowly crept into the stock market over the last decade.
Maybe everyone else isn’t a pollyanna. Maybe I’m no Cassandra. Maybe everything is fine and this looks like any number of other times in history and things will return to normal. But it sure feels like there’s a rot that keeps spreading, and no one has any interest in even talking about some form of rule-making or regulation that could address it.