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Company "worth" is calculated as: last sale price * number of shares outstanding stock is held by founders and fans ==> few sellers more buyers than sellers ==> stock price goes up ==> inflates worth Company worth is an imperfect metric at best and non-sensical at worst.
It's not. Enterprise value of Toyota: $318B Enterprise value of Tesla: $205B
It's not. Enterprise value of Toyota: $318B Enterprise value of Tesla: $205B
Toyota Market Cap: 171.994B
Tesla Market Cap: 205.619B
> Market capitalization, commonly called market cap, is the market value of a publicly traded company's outstanding shares
> Market cap is given by the formula MC = N * P, where MC is the market capitalization, N is the number of shares outstanding, and P is the closing price per share
> A more comprehensive measure is enterprise value (EV), which gives effect to outstanding debt, preferred stock, and other factors
You can go down rabbit holes of apparent market manipulation, seeming fraudulent financial statements, an unquestioning media, toothless and out to lunch regulators, bubble inducing liquidity pushed by central banks but that stuff doesn't matter until it does. See Wirecard, Enron, Et al.
It's not. Enterprise value of Toyota: $318B Enterprise value of Tesla: $205B
According to the NYSE, the market cap of $TM is $171.88B and $TSLA is $205.88B.
Company "worth" is calculated as: last sale price * number of shares outstanding stock is held by founders and fans ==> few sellers more buyers than sellers ==> stock price goes up ==> inflates worth Company worth is an imperfect metric at best and non-sensical at worst.
I've heard this argument many times, but consider that everyone holding a share has the option to sell at the market (last sale price) and are choosing not to. That seems like a pretty fair way of calculating worth.
Company "worth" is calculated as: last sale price * number of shares outstanding stock is held by founders and fans ==> few sellers more buyers than sellers ==> stock price goes up ==> inflates worth Company worth is an imperfect metric at best and non-sensical at worst.
I've heard this argument many times, but consider that everyone holding a share has the option to sell at the market (last sale price) and are choosing not to. That seems like a pretty fair way of calculating worth.
Stockholders are not free to sell, technically or for practical purposes. Many stockholders are under restrictions to hold like employees, founders, index funds etc. Most non-index institutional holders have to hold TSLA if they want exposure to Automotive, EV, Battery industries. There is simply no option.
On non-technical restrictions, what do you think will happen to TSLA,FB or AMZN stock if Musk, Zuck or Bezos started dumping their holdings respectively. The stock holds up precisely because the the founder is holding it. Necessary but not sufficient.
Finally not everyone who wants to sell can avail the last price. Every bid taker (seller) causes a price impact. This has been explored extensively by academics in Market impact models and Optimal execution of block trades. See [1] and [2]. This is the financial econometric model of "a rush for the exits will cause a stock to crater".
Last price is imperfect but not useless. Depends on how much signal vs. noise you attribute to the sale price in the value discovery process.
Because stock prices reflect future earnings, not past earnings. Basically, people buying TSLA stock believe future sales will be larger than Toyota.
I have a hard time seeing how future earnings of Tesla even exceeds the liquidation value of Toyota, given the stock has never made earnings a year in its life.
Because stock prices reflect future earnings, not past earnings. Basically, people buying TSLA stock believe future sales will be larger than Toyota.
Many of them believe that Tesla stock will somehow get them a piece of spacex. Many more are just following the price.