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The kid literally has never made a profit in any of those companies. Sure he hit gold with paypal but his stocks are only based on wild speculation. The stock price of his companies have no ground in reality even if there may be future benefit.
Elon Musk is a genius, so I wouldn't call him a kid lol. However, you make a good point in questioning why someone would invest in one of his companies when their valuations are sky high and they aren't showing profits.
There are quite a few reasons...
Speculation - Tesla is the first electric car company that offers high performance, luxury, nice styling, revolutionary technological features and most important, DRIVING RANGE! Their network of supercharging stations across the country are for the first time ever, making owning an electric car not a burden. You can actually drive from San Francisco to Miami without ever paying for any gas and it won't cost you a dime. People are willing to bet that Tesla will be the new face of the auto industry, which is why people are willing to invest in it now, even though they aren't really showing any profits.
Charts/Technicals - The stock market is not rational, it is irrational. If you learn about charting and technical analysis, you will understand why there are stocks like Tesla that have gone up 500%+ while profit, dividend-paying giants have gone up only a fraction of the amount.
Elon Musk is a genius, so I wouldn't call him a kid lol. However, you make a good point in questioning why someone would invest in one of his companies when their valuations are sky high and they aren't showing profits.
There are quite a few reasons...
Speculation - Tesla is the first electric car company that offers high performance, luxury, nice styling, revolutionary technological features and most important, DRIVING RANGE! Their network of supercharging stations across the country are for the first time ever, making owning an electric car not a burden. You can actually drive from San Francisco to Miami without ever paying for any gas and it won't cost you a dime. People are willing to bet that Tesla will be the new face of the auto industry, which is why people are willing to invest in it now, even though they aren't really showing any profits.
Charts/Technicals - The stock market is not rational, it is irrational. If you learn about charting and technical analysis, you will understand why there are stocks like Tesla that have gone up 500%+ while profit, dividend-paying giants have gone up only a fraction of the amount.
I don't see that company ever paying off in the long term. People WILL EVENTUALLY wonder why they aren't making money and when they try to cash out before a crash happens it will cascade.
I don't see that company ever paying off in the long term. People WILL EVENTUALLY wonder why they aren't making money and when they try to cash out before a crash happens it will cascade.
That is the nature of high momentum stocks, eventually once their growth subdues, people will look at their financials and if it hasn't caught up, then their stock will most likely fall accordingly, unless investors see hope.
However, to answer your question, "why would anyone buy these stocks" well because you can make a ton of money in the meantime.
That is the nature of high momentum stocks, eventually once their growth subdues, people will look at their financials and if it hasn't caught up, then their stock will most likely fall accordingly, unless investors see hope.
However, to answer your question, "why would anyone buy these stocks" well because you can make a ton of money in the meantime.
I understand but it takes a special kind of risk taker to do it. I'd have a heart attack day trading. The shorter term the trading the closer to resembling gambling it is.
Its a sexy company. Products have buzz, company is injecting life in the automotive space, Elon is tapped to be the next Jobs. Whether or not it makes are great company, who knows but so far people that invested early and held are sitting pretty.
Sort of like Amazon, which after 20 years doesn't make much profit, but people still love investing in it.
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