On valuations. Why fundamentals matter? Tesla is only one example of Irrational Exuberance.

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By gerardrego on September 18, 2013 • ( 2 Comments )

I put out a simple analysis days ago on why companies like Tesla have valuations that don’t follow fundamentals  and why many are in the same boat.Aswath Damodaran has the same view of the world. There are quite a few out there that are showing great examples of “Irrational Exuberance” and what follows is to be a good student of history. On Tesla being a pioneer I will do a blog on the Profit-Pool of the Auto Industry and what everyone will have to go after and it they do including Tesla they will change the ecosystem forever. But that is about the business model not the tech.

 

The Valuation Expert Who Nailed Apple Says That Tesla Is Worth A Fraction Of Its Current Price
Aswath Damodaran, NYU’s legendary finance professor who predicted the top in Apple, and the bottom for Facebook, has just unveiled his fair price for Tesla.
http://www.businessinsider.com/aswath-damodaran-tesla-fair-value-2013-9#ixzz2fEuRI2zh

 

 

 

So if you are an entrepreneur, startup, investor, CXO, VC/PE fund or anyone connected to the ecosystem, don’t look for valuations. Ask what the Cash Conversion Cycle, Stock Turns and Gross Margins per Stock Turn are and you have a great view of the world. The rest is “Big Data”.

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Tagged as: cars, climate, google, private equity, tesla, transportation, valuation, venture capital