The Elon Musk Thread

[linebaugh]

The town I'm at is hip and a tourist spot but several hours from the closest proper city of note. Its the south but approaching the mason dixon. I think the rent is great. I split 1k a month. Interesting to hear the lifers complain about the high rent in town, especially coming from the Austin area, where the spot I'm at for the price I have would be absurd.

The college town I was at I paid $250 a month for a house near campus. It was an absolute shithole, but it was nice only having to make 1k a month and be perfectly stable.

 

[linebaugh]

Can someone explain to me how tesla is the worlds most successful auto manufacturer despite rarely ever seeing their cars on the road?

 

[version]

Can someone explain to me how tesla is the worlds most successful auto manufacturer despite rarely ever seeing their cars on the road?

billoreillyyoucantexplainthat.jpg

 

[IdleRich]

Can someone explain to me how tesla is the worlds most successful auto manufacturer despite rarely ever seeing their cars on the road?

Successful and how you define it matters here.

 

[IdleRich]

This is the one that gets doled out whenever I want to ask questions like these, alongside higher-ed subsidies (which—an aside—is an area where smart economic policy and moral righteousness agree). It's an example that gets brought up because it feels like a no-brainer—"feels" because it's part of our ethical development as a culture ("Western civ"); we're right in the sweet-spot of the trajectory. It's contingent, not obvious in its own right—which is to say, it doesn't answer any of the philosophical problems of fairness or our debts to mankind, it just defers them. (For what, liberal common-sense empathy? Again, I agree, it sucks people go into terrible medical debt, that's just not the point.)

What I want is to get below what "feels obvious because all of our friends agree it's obvious." Again, I think these things feel obvious because of a historical set of political campaigns, policy priorities, geopolitical examples in the Nordlands, etc—not because of anything inherent in the "liberty." If you came up in a different culture even in your own country, you might have radically different intuitions about what's owed in the way of healthcare; you might even agree with the progressive instinct to empathy but disagree for logistical reasons. Our sense of rights and liberties are as constructed as everything else.

What's the point here?
I was replying to what you said about "Most Americans have the basics but still feel unhappy" and I was pointing out they lack a huge safety net that the rest of the developed world has. Do you disagree?

 

[linebaugh]

Successful and how you define it matters here.

I was referring to Leos comment- Teslas market value, 500 billion, is more than all other major manufacturers combined. So whatever 'market value' means

 

[IdleRich]

Sure, I get that, but I was just disputing market cap as a measure of success. I guess that when you read the mission statement of a listed company their first aim is always to "deliver share holder value" and other things such as "make good cars" or "sell good cars" are much lower down the list... so, arguably you're in the right. I just think that most people would mean something different.

 

[linebaugh]

I was wondering what tesla was doing to have such market cap despite not selling many cars. I slept through economics.

 

[luka]

I'd like to know too. WhEre is that skinny degenerate Vimothy?

 

[IdleRich]

Of course a car company could be profitable and not sell many cars (suppose they were cheap to make and sold for a high price) but Tesla isn't profitable either so that's not the answer. But the question should probably be "How is a company that doesn't make a profit valued so highly?".
I guess a big part of it is something that, depending on where you sit, you might call hype or potential. The market cap is the share price x the number of shares so it depends on the share price... and famously the share price depends on what people pay for it. People think that it will become profitable one day so they buy the shares now... and also probably of them think it's cool or something so they buy the shares instead of GM or whatever.

 

[linebaugh]

@suspendedreason @beiser @vimothy pls

 

[IdleRich]

Pretty galling to be honest when Musk did all that stupid stuff like blatantly lie about a takeover in a sad attempt to manipulate the share price... and it's higher than ever anyway.

 

[IdleRich]

Of course a car company could be profitable and not sell many cars (suppose they were cheap to make and sold for a high price) but Tesla isn't profitable either so that's not the answer. But the question should probably be "How is a company that doesn't make a profit valued so highly?".
I guess a big part of it is something that, depending on where you sit, you might call hype or potential. The market cap is the share price x the number of shares so it depends on the share price... and famously the share price depends on what people pay for it. People think that it will become profitable one day so they buy the shares now... and also probably of them think it's cool or something so they buy the shares instead of GM or whatever.

Actually I'm wrong, apparently it did make a (relatively small) profit this year.

 

[padraig (u.s.)]

yeah it's not really that hard to understand. @IdleRich is correct. it's just hype.

there's absolutely no real world reason why Tesla's stock price "should" be as high as it is

partially it's just the larger trend of the stock market becoming in general totally divorced from the actual economy. idk all the reasons for that - I don't think anyone does - but there are some obvious ones you can point to, i.e. the Fed flooding the market with cash and maintaining low interest rates, the huge growth of passive investment, etc, things which combine to massively inflate stock prices over what they're "worth"

but really it's just hype

 

[padraig (u.s.)]

whatever else he is Musk is an excellent salesman of the future and instilling a messianic faith in himself and his companies no matter what they actually do or don't do. i.e. he's been making predictions about driverless cars for years that have failed to materialize and it never matters.

if you look at what they're actually doing, part of the reason Tesla is profitable this year is that they majorly reduced wages back in July

actually, right around the same time that Musk himself became eligible for $2bn in stock options tied to...increased market cap

 

[IdleRich]

That's a good question in there. I've always thought of the stock market as divorced from the actual economy... but was that always the case? Now you say it i do have a suspicion that earlier in the 20th century the stock market's performance was probably more closely aligned with the performance indicators of the general economy. I guess that nowadays, as stocks and derivatives are increasingly held by a smaller group of people, then their performance is directly relevant to fewer people.

 

[yyaldrin]

ain't it also people betting on tesla becoming the monopolist of the automobile industry? like amazon in its respective industry.

 

[version]

There was a theory a while back that companies like Tesla would give rise to further US interventions abroad as they try to extract the lithium reserves from places like Bolivia for their car batteries.

 

[yyaldrin]

that is 100% true.

 

[padraig (u.s.)]

Now you say it i do have a suspicion that earlier in the 20th century the stock market's performance was probably more closely aligned with the performance indicators of the general economy.

yeah it's not that it was ever perfectly aligned with actual performance - as you say the price of a share is what people are willing to pay for it - but that it's become almost totally divorced from performance. both in a more general macro sense and in terms of individual companies. and tho I don't pay close enough attention to the market to know the details, I have to think that some companies have grasped and adjusted to that truth - that performance has significantly less impact on share value than it did, say, 20 years ago - better than others, with Tesla in the highest percentile of that kind of reality/perception arbitrage.

it's again, something I don't follow the market day-to-day enough to know, but it seems like a trend that been building for awhile but that people only began noticing - or publicly writing about anyway - back in March when markets began to so clearly diverging from reality