Esty had no place in the S&P 500 in the first place. Looking at the chart it was a pump and dump stock and was only pumped due to the zero interest rate phenomenon with decades of QE (quantitative easing) policy.
Etsy should join the rest of the worthless SPAC companies that almost all of them ran straight to zero. Goodbye.
Tesla was lucky this time. They are next to be kicked out of the S&P 500 if they decide to join in the race to continue to damage their own stock.
I don't think Etsy is worthless (it has ~US$2.5bn in revenue), but I think the correct value of Etsy is much lower than it currently is and certainly not a valuation with a market cap placing it in the S&P500.
Memento mori, hindsight is 20/20.
Using one company as evidence of a broad thesis makes the argument seem weaker, not stronger.
Hell, Uber. I can't remember a single time their prospects were ever discussed positively, they were the "ZIRP" poster boy.
They were a great investment for everyone but possibly the last private Softbank overvaluation.
Their rides have been profitable for years and are a $150 billion company after 5% rates.
As it is, the company is valued at $150 billions, but in the past 5 years only the last one was profitable - with a $2 billion profit. Where do you see the 'rides have been profitable for years' ?
It actually looks quite wildly overvalued to me. Perma-bears will be proved wrong once the company start making real money justifying their valuation.
And I believe that was YoY profit, so profitable the year before that date and profitable the past year since. Investing in Uber Eats expansion was hampering profitability but not the rides.
Before rides was profitable they were a $50b company, so if you correctly believed they would improve probability, you would’ve 3x your investment from 2 years ago. Same thing happened for those critical Facebook, Google, or Amazon could ever be profitable.
[0] https://investor.uber.com/news-events/news/press-release-det...
https://investor.uber.com/news-events/news/press-release-det...
Businesses are about cash flow, and Uber has an abundance of it. They’ve also clearly won the mindshare battle with Lyft, and are “the” ride-share app in every market. Regional providers only displace them in countries with protective regulations, and even in those places people still ask “what’s the Uber app here?” They were leading the pack, kept their lead, and now they’re running steady with nobody on their tail.
The founders got them through the growth stage, with plenty of controversial behavior that helped attract the “perma bears,” who may have been right if the founders remained in charge. But ever since the suits took over the company, they’ve been fine tuning it into the money printing machine it was always destined to be.
Etsy's biggest "innovation" was they displayed their hand picked products on the homepage by color.
Tesla single handedly drove adoption of electric cars to where it is today, for better or worse Tesla has had a MAJOR impact on the world.
They’re making profits, selling more cars every year.
I get it’s fashionable to dish Elon, but their fundamentals say its unlikely they’ll fall out of S&P500
why?
You’re not buying “a stock,” you’re buying shares of an actual business and you need to judge for yourself a reasonable price as to what you think you’re buying it for.
I’d argue we’re probably already there. It’s why people don’t think twice about paying $25+ per $1 of earnings and don’t realize what a stupid decision that is and then they try and rationalize it by saying, “Oh, well the business will continue to grow and that’s what you’re paying such high prices for.”
No, you’re just getting scammed.
It’s the same thinking that led us to predominantly young men buying a non-tangible thing just because it goes up in price, in the hopes that some greater fool will buy it from you for said greater price.
But hasn't the market already incorporated PE ratio (and other factors) into the company's estimated value?
It sounds like what you're saying is PE ratio has more predictive value than whatever indicators people are using (e.g. press coverage and leather jackets)
Or are you saying that our entire concept of value is screwed up? Not really clear
At current prices of many companies, you would need to wait 50 years to get your money back, if you would buy the whole business. But since those stocks move 5, 10% per day, and in recent years it was mostly up, people got really greedy - and indeed, the fact that one can trade 0dte options makes it so much easier to gamble. Look up the volumes of those options - it's absolutely mind blowing. Conventional wisdom is that 90% of individual investors are loosing money in the stock market. With options, I bet it's 99.9%.