How Elon Musk became the second richest man in the world

One of the big economic news of the week was – Elon Musk’s Tesla Company was worth five trillion dollars and with this Elon Musk became the second-largest rich in the world.

Bill Gates was preceded by him on this second rung.

The BBC Tech Tent podcast, related to the news of the technology world, has a question as to what investors are seeing in this electric car making company which was not shown a year ago.

Because at the beginning of the year 2020, the stock market valued Tesla at $ 80 billion and even then it was being said that this price is more for a business which is not particularly profitable.

The shares of this company continued to grow throughout the year and then the company crossed the value of five trillion dollars.

On the way to profit …

There were reports that the S&P 500 index would make it one of the leading companies.

The price of Tesla is now more than the total cost of Toyota, Volkswagen, Hyund, GM and Ford.

When the tech tent calculated, it was found that these companies made a total profit of 50 billion dollars last year. Some of these are now facing economic killings due to Corona epidemic.

At the same time, Tesla is on the path of $ 1 billion profit this year.

If we look at this valuation of the company, does it mean that investors are likely to benefit 50 times in the near future?

Auto industry

Eileen Burbidge of Passion Capital says that “it only means that those who are buying the stock at this price think they will be able to sell it at a higher price.”

The task of waste is to evaluate new companies, which are still in a much earlier stage than Tesla.

According to analysts, often this process is also irrational as this valuation also depends on the mood of the market and not just on the quality of the company.

Tesla fans say that the company has given a new direction to the auto industry. But this was true even in early 2020 when the company was ‘just’ 80 billion dollars.

“There was no such fundamental thing in business, on the basis of which it could be said that at the beginning of the year it would be five to six times more profitable,” says Burbidge.

Stock market

But analysts insist that investors are gambling for a while.

Burbidz said, “I think the market is fundamentally logical. I think it’s time to talk. Buyers feel that they will be able to sell their shares at a higher price. And they have reason to think so.”

According to analysts, there is no need to argue more on buying or selling stocks for a short time.

You may know a story where a reporter of Fleet Street Stock asked his editor why the market is growing. The reporter’s reply was, “There are more buyers than sellers.”

When the market fell, the reporter used to say the opposite.

Electric car company Tesla

Such as a 1945 bottle of Burgundy or a painting of Picasso. Like a small flat in London or San Francisco.

In the same way, Tesla’s valuation is the same as the buyer is considering the product more than the price, no matter how irrational the price is.

However, an expert on this subject said several months ago that electric car company Tesla has been charged more.

Rather on May 1, he tweeted, “Tesla shares are overpriced.”

Who was this sir? The officer himself was Elon Musk and after this tweet, the company’s valuation also decreased by $ 14 billion.

But after that the share price has increased four times but who knows what will happen in future?