> We Think the SpaceX IPO Is Overvalued
Well... yeah, sure, everyone thinks that.
And the fact that it doesn't matter and won't impact demand for shares illustrates how increasingly and dangerously untethered the stock market is from reality.
Well... yeah, sure, everyone thinks that.
And the fact that it doesn't matter and won't impact demand for shares illustrates how increasingly and dangerously untethered the stock market is from reality.
"Disconnected from historical valuation norms" is a more sensible statement.
The idea that the stock market is "detached from reality" is dangerous too because the stock market is...reality. People make and lose real money in it every day.
There are good arguments that the historical valuation norms are reasonable and deviation from them is "dangerous" but there's no actual law that says the stock market needs to behave according to history.
While I personally think the current behavior has significant risk, I also can't dismiss that the role the stock market plays today is different. It's not just about raising capital, providing liquidity, price discovery, risk management and building wealth, for large numbers of laypeople it's also the go-to casino (entertainment) and a platform for expression (way to express dissatisfaction with corporations, politicians, the world, etc.).
You and I and a million other people might run away from Tesla's valuation but that doesn't mean that the market must.
I think it's very obvious that the historical norms that governed and explained pricing in the stock market no longer apply, for better or worse. Between the massive manipulation of the markets by central banks to the rise of the retail investor (and social media, meme stocks, etc.), there are a lot of factors in play that weren't a thing 30 years ago.
Markets allow people to bet on it. So one would assume the author is taking the revenue from his $70/year subscriptions and shorting the bubble he sees (or at least positioning himself to do so).
Part of the reason for this demand is the fact that index tracking funds like QQQ will be forced to buy up massive volumes of shares. Not only that but other non index tracking funds that track large cap stocks will also have to buy. Vanguard large cap for example manages trillions of dollars. That in itself will have 100s of billions worth of buy orders.
It's better than what preceded it but we still manage retirement wealth poorly.
I am looking forward to buying a little piece of it. I plan on putting a couple thousand into the IPO. I view it like buying into D.D. Harriman in "The man who sold the moon." I plan on taking those shares and forgetting about them for a couple decades. Maybe leave them to my grandchildren. This is the longest of plays and I hope it works out.
Maybe SpaceX will fail, but this is the first time since I was a boy that there is any real hope that humanity will step into that future, and I want to be part of it. Maybe Musk is suckering in dreamers like me, but I'll bet on a better future. This is it. This is our shot. Godspeed.
As far as I can tell, that’s exactly how it works. Reality is investor emotions. If it shouldn’t be that, I mean the whole system needs a rework.
One of the obvious problems with the short-term thinking is you can trade on feelings all you want, but if things go really bad the company goes bankrupt and suddenly the court say no more trades allowed anymore and your and your value goes to zero.
“When the tide goes out we will find out who has no shorts on.”
As an example here, in the 2022 (relatively mild) stock market downturn, when the S&P 500 gave back about 20%, TSLA dropped from a peak in the low 400s, to a low of 122... roughly a 70% drop peak to peak. It's back to ~400 now, and it could go higher again. But, in the next downturn, it could go a lot lower.
The rest of the world wants dollars, and as long as they do, the US benefits massively from that demand, and it would be foolish not to satisfy that demand, as it's pure benefit to the US.
It seems that many are devoted to ending the status of the dollar as the reserve currency of the world, but it's a strange and subversive thing for any US resident to want or desire.