Why is Tesla worth more than VW? [TSLA stock]

Опубликовано: 15 Январь 2021
на канале: The Stoic Investor

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How come a company with 25 bn in revenues has a larger market cap than one with 252 bn? This is a great example of how the market cap of a company isn't always correlated with its size. Tesla's market cap is currently 800 bn while VW's only 100 bn.

A smaller, fast-growing company such as Tesla is worth more than larger competitors like Toyota or Volkswagen simply because investors think it's shares are worth more. Future earnings growth and innovation drives demand for shares of Tesla, sending the share price up and thus the market cap.

Tesla's P/E ratio is sitting at 1 600 and VW's at 17. If we give them some runway however and look at the forward P/E, it stands at 205 and 7,7. So Tesla might be able to grow into its valuation and market cap if the company can maintain or even speed up its growth.

FOMO and the massive wave of investing in EV companies are also factors to consider when trying to justify lofty valuations like that of Tesla. Like it or not, a skyrocketing share price can actually attract even more investors and send valuations out of control.

Whether Tesla is overvalued based on financial metrics or not isn't important and in the end investors decide the worth of a company, not the economists.

Disclaimer: This video is purely my opinion and should not be regarded as factual information. I am not a financial advisor. This is not a recommendation to buy or sell securities. Do not assume any facts and numbers in this video are accurate. Always do your own due diligence.

Stocks go up and down, don't invest simply based on what you hear or see in my videos. I might have a bias towards stocks I talk about, but I try informing my viewers when this might be the case.

My personal stock portfolio currently consists of the following stocks:

Activision Blizzard (ATVI stock)
Amazon (AMZN stock)
Microsoft (MSFT stock)
MongoDB (MDB stock)
Nextera Energy (NEE stock)
Nvidia (NVDA stock)
Tesla (TSLA stock)
The Trade Desk (TTD stock]