<story><title>Tech bubbles are bursting all over the place</title><url>https://www.economist.com/business/2022/05/14/tech-bubbles-are-bursting-all-over-the-place</url></story><parent_chain><item><author>martindbp</author><text>Tesla made more money last quarter than Ford, GM and Toyota. Toyota made 10x the number of cars as Tesla. Tesla is growing vehicle production 50% YoY, while growing profit even faster (having barely hit economies of scale yet). Tesla has a backlog of orders approaching a year in many regions. Everyone else is losing money on their EVs and can&amp;#x27;t make them in volume production, can&amp;#x27;t find the batteries for them, because they started 10 years too late. That&amp;#x27;s the reason for Tesla&amp;#x27;s valuation, it&amp;#x27;s pretty simple.&lt;p&gt;Whether you believe the competition will catch up, or Tesla will fail for some other reason is besides the point. I&amp;#x27;m just trying to show that the current valuation is not &amp;quot;insane&amp;quot; given current trends, there&amp;#x27;s a very real logic to it and not (completely) FOMO.&lt;p&gt;Correction: Toyota&amp;#x27;s earnings were higher than Tesla, it was operating income that was higher (remembered it wrong).</text></item><item><author>legitster</author><text>This has been a long time coming.&lt;p&gt;Back in the day, there was an inherent understanding that a stock price is supposed to reflect &amp;quot;the fundamentals&amp;quot; - present value of the company + future earnings. And of course there was some amount of speculation around future earnings, but for the most part companies at least &lt;i&gt;tried&lt;/i&gt; to be profitable.&lt;p&gt;But if you look at the share price of like, Tesla - it&amp;#x27;s completely insane. There is no way your slice of the company is worth that much. The stock market has been behaving like a pyramid scheme, where everyone assumed there will be more money entering than leaving any given stock.&lt;p&gt;Tech is a pretty egregious sector because of how many business models basically boil down to &amp;quot;we don&amp;#x27;t actually need to make money if we have a desirable stock&amp;quot;. In the long run, I don&amp;#x27;t think we&amp;#x27;ll be worse off if the next generation of software companies actually focuses on making products people want to buy rather than play games with DAU and user acquisition and etc.</text></item></parent_chain><comment><author>legitster</author><text>I&amp;#x27;m not sure where you are getting those numbers from. Ford had $37b in revenue Q4. Tesla had $16b.&lt;p&gt;Tesla is an impressive company that&amp;#x27;s managed to finally be profitable. But currently their market cap is higher than &lt;i&gt;all other auto manufacturers&lt;/i&gt; combined.&lt;p&gt;&amp;gt; Everyone else is losing money on their EVs and can&amp;#x27;t make them in volume production, can&amp;#x27;t find the batteries for them, you do the math.&lt;p&gt;That&amp;#x27;s the thing, this space is getting incredibly crowded this year. Kia&amp;#x2F;Hyundai, Ford, and VW are all putting out very impressive mass-market EVs that are selling like hotcakes.</text></comment>
<story><title>Tech bubbles are bursting all over the place</title><url>https://www.economist.com/business/2022/05/14/tech-bubbles-are-bursting-all-over-the-place</url></story><parent_chain><item><author>martindbp</author><text>Tesla made more money last quarter than Ford, GM and Toyota. Toyota made 10x the number of cars as Tesla. Tesla is growing vehicle production 50% YoY, while growing profit even faster (having barely hit economies of scale yet). Tesla has a backlog of orders approaching a year in many regions. Everyone else is losing money on their EVs and can&amp;#x27;t make them in volume production, can&amp;#x27;t find the batteries for them, because they started 10 years too late. That&amp;#x27;s the reason for Tesla&amp;#x27;s valuation, it&amp;#x27;s pretty simple.&lt;p&gt;Whether you believe the competition will catch up, or Tesla will fail for some other reason is besides the point. I&amp;#x27;m just trying to show that the current valuation is not &amp;quot;insane&amp;quot; given current trends, there&amp;#x27;s a very real logic to it and not (completely) FOMO.&lt;p&gt;Correction: Toyota&amp;#x27;s earnings were higher than Tesla, it was operating income that was higher (remembered it wrong).</text></item><item><author>legitster</author><text>This has been a long time coming.&lt;p&gt;Back in the day, there was an inherent understanding that a stock price is supposed to reflect &amp;quot;the fundamentals&amp;quot; - present value of the company + future earnings. And of course there was some amount of speculation around future earnings, but for the most part companies at least &lt;i&gt;tried&lt;/i&gt; to be profitable.&lt;p&gt;But if you look at the share price of like, Tesla - it&amp;#x27;s completely insane. There is no way your slice of the company is worth that much. The stock market has been behaving like a pyramid scheme, where everyone assumed there will be more money entering than leaving any given stock.&lt;p&gt;Tech is a pretty egregious sector because of how many business models basically boil down to &amp;quot;we don&amp;#x27;t actually need to make money if we have a desirable stock&amp;quot;. In the long run, I don&amp;#x27;t think we&amp;#x27;ll be worse off if the next generation of software companies actually focuses on making products people want to buy rather than play games with DAU and user acquisition and etc.</text></item></parent_chain><comment><author>bink</author><text>All of those things can be true and Tesla&amp;#x27;s stock can also be over-valued. A rapidly growing and popular company doesn&amp;#x27;t justify any arbitrary valuation.</text></comment>