yessir, Denny, TSLA is an exception, and I’m sure you follow others that are less risky/rewardy.
The investing world, for the past number of years has decided that sales growth, and to some extent free cash flow (regardless of the source of that flow) is the basis upon which The Market is going to value companies. And sure, why not; no less rational than P/S or P/E or FCF/EV ratios. In the final analysis, we all play a game that tells us we have “a claim on future cash flows,” which is in all reality, poppycock.
So let’s look at TSLA; a fine company with a good story, good products, some competitive advantages, etc. But the ultimate question is "Is the stock worth $1240 (its ATH) or $720 (its current pre-market). The answer is obviously “yes,” to somebody. But what do we mean by “worth?” I think the answer to that varies quite widely; a quant algo is valuing it one way, an individual “investor” differently.
So what’s the way to think of value for me (or you or whoever)? I am currently quite confused by my question because I don’t know if this time is different. The market is made up of all of the players. If the most influential players (by volume) think top line revenue is king, then I am a fool to value a stock otherwise.
But looking at the TSLA chart, the stock price was trending typically until mid-2020; 18 short months ago. Then whoosh-bang…except that the bang isn’t here yet. When it took off it was trading at $200. Given excellent growth and prospects, in the Old World, maybe it would be $300 or $350 18 months later; but still richly valued by those Old World standards.
My sense is that we may be headed for a proper reckoning. TSLA may hang at $500 as NASDQ reverts to the mean (and overshoots). But the likelihood of $350 is pretty high. How dead do you want your money to be and for how long? At $350/share, it’s a lot of money at stake, especially when at $200, by Old World standards, TSLA is still richly valued, even today after all of its undeniable progress?
These are issues lost on the Saul board. I sense that many/most are young and unseasoned themselves. They understand what they think they understand, but they have yet to be called to attend Market School. We all have to attend eventually. If we are truly paying attention to Teacher, then we learn that we can never leave.
and not for nothing, but Saul’s own post yesterday re: MNDY was completely free of his usual self confidence. I suspect that even he is in for a rough ride, and depending on how his real life is organized, he may be severely injured financially. 18 months from now Saul’s board may be as sparsely attended as Pencil’s board, which is in both cases a loss.