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Originally Posted by New Era
I'm not that surprised you don't get the point. Market cap is a very good indicator of investor confidence, and how well they think the company is going to perform in the foreseeable future. The fact the Tesla does have such a high market cap is a good indicator of where people see not just the fortunes of Tesla going, but the fortunes of the whole auto industry. The days of the combustion engine being under the hood of most cars is coming to an end. Alberta needs to find a new market for its fossil fuels.
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Market cap is a good indicator of investor confidence because it is literally
determined by investor confidence. However, that is not a good indicator of future profitability or where the industry is going. This is why stock prices are highly volatile and bubbles form - because current investor confidence can be subject to extreme sentiment and overconfidence. See: Nortel, the highest market cap ever achieved by a Canadian company (and an unlimited number of other examples)
Quote:
Originally Posted by HotHotHeat
Given the ramp up of the model 3, you'd expect a net loss at this point. Not sure how your explanation raises flags about the entire business model in the long term. Their cash flow will be just fine once Tesla Energy products launch.
There are plenty of talking heads out there stating that Tesla is doomed to fail, unprofitable, etc. Reality is that their investors and customers don't care, because they want them to succeed and disrupt the industry.
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This actually sums it up far better. Tesla's market cap reflects the attitudes of Tesla investors (supporters). It does not reflect economics.