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Originally Posted by opendoor
You're talking like companies raise their own stock price unilaterally, but it's investors (who base their valuation on things like debt) who determine the price. In an efficient market, the market cap will tend to be total company value minus debt and preferred shareholder value. So a $500B market cap company with no debt is being valued similarly by the market to a $200B market cap company which has $300B in debt. But the first company will have a P/E that's 2.5x that of the second company at a given net income level, which is why P/E on its own isn't a particularly useful metric.
No one's arguing that long-term after their earnings stabilize more, that Tesla's P/E is going to be completely out of whack with its competitors (at least after accounting for debt levels). But a company with low debt in a growth phase can have a higher P/E than their debt-laden competitors and that can be sustainable.
Look at Toyota coming out of the financial crisis. Their P/E was 30-35 in 2011-12, which taken at face value would suggest that their stock was significantly overpriced. But the opposite happened, as their stock price doubled in the next few years because they kept increasing their earnings.
In light of that and their lack of debt, Tesla's forward P/E of 29 isn't obscenely high if they can continue to grow their earnings. Will that happen? Who knows. I'm not personally invested, as I think their stock price usually assumes everything going right. But I also don't think it's a $30-40 stock unless sales really crater (which could certainly happen).
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One could argue argue their lack of debt is hurting their business more than helping. They can't keep up with demand and are running out of runway on their head start in the market. May have been wise to spend like wild to this point to fill the demand that is out there and build up brand loyalty with people who are looking to buy their first electric car.
Quite possible they look back at this as missed opportunity to pull an Amazon who spent like mad in a developing market, they didn't turn a profit forever, but now they are the dominate player in a giant market.