Are investors idiots in regard to TESLA stock? In a word: YES!

Everyone knows TESLA stock is a huge bubble. 

Its market cap is more than 6000 times 2019 earnings. Beautiful!

Its PE ratio is 1031. Source: Yahoo finance.

Yet investors keep bidding the stock anyway. Why is that? Why are they paying that much for so little value? TESLA pays no dividends, it has no leadership or competitive technology, it is not a very experienced car company, it is in a business which is capital intensive, it does not sell that many cars compared to other manufacturers, and on and on. Are the investors idiots? I say YES, they are stupid! 

TESLA is a reflection of the frenzy speculation we see these days on the markets overall. Apple, Amazon, NVIDIA, and many many others.

Here is an opinion on why, despite all these stupid valuations, investors keep piling into the stock.

It’s only a matter of time before the Tesla bubble bursts. Forget its “story”; the hard data all points towards its stock being ridiculously overpriced.

Nothing rational explains the dizzying rise of Tesla stock in recent months. Aside from over-exuberance and widespread desperation for the next big thing, there’s no reasonable justification for TSLA suddenly becoming the world’s most valuable carmaker.

Why are people paying so much for such modest earnings?

Two words: Elon Musk. The Tesla founder isn’t just the face of the company. He is the company. He’s outspoken, brash, and a supposed visionary. He attracts investors.

As the dragonhead of the Electrical Automobile companies, Tesla has persuaded many people that it is a new “Apple” of the coming decade and all other petrol-fuel mechanical car companies are just like “Nokia”.

There you have it. Put it simply, investors are waiting for Mesiah; and Elon delivered, these believers see him as the waited God.

Good luck!