Amazing to see TSLA trading level these days knowing where SP was only half a year ago.
Not really.
Let's take a step back. Most people think economics is the study of money but any economist who "gets it" will tell you it is almost entirely the study of human behavior. Because every financial transaction has a human buyer and a seller who agree upon a price. How they think and behave determines this price. A high growth stock like Tesla is inherently difficult to assign a present value and two fully informed and knowledgable people can assign it wildly different values on the same day simply by tweaking the timing of future growth milestones or the assumptions of how profitable those milestones will be. The price of TSLA shares is determined by the volume-weighted average of all the buyers and sellers at any given moment. Anyone and everyone with a share to sell or money in their account with which to buy gets a vote. Over time the perception of how much a company is worth changes. Very good news or very bad news can change the value immediately and dramatically. Lacking significant or unexpected news, the change in price is reluctant to change quickly in any dramatic fashion. Because if it was "worth" $x yesterday, it must be worth about $x dollars today. But over longer periods of time the value people assign to it can drift.
I thought Tesla was wildly over-valued when it was trading over $300 over two years ago given the cash challenges they faced. They had to execute perfectly to not need substantially more borrowing or dilution than anticipated. Now, with the Gigafactory on track and the excellence of the reliability and the design engineering of the Model 3 (and by inference the Model Y) demonstrated beyond a reasonable doubt, I think Tesla is solidly under-valued. But some reasonable and fully informed people will and do disagree. It is the balance of those who agree/disagree that determines the share price. It's really a number made up collectively by a bunch of people, most of whom have a rather sketchy idea of what they are betting on. There is no doubt that Tesla still faces many serious challenges. It is not easy to pull off the opening of a new factory. It is dependent upon the excellence of the production engineers. One person can only do so much. However, each year that passes Tesla shows an unnatural ability to be able to make difficult things seem natural. I think Tesla's products are not fully understood for just how excellent they are. They are not just a regular car that a bunch of engineers decided would be a bit better if they hooked it up to electric motors and threw some batteries under the floor. The excellence of the engineering is wildly under-appreciated.
A difficult to assess risk is just how far their adversaries are willing to go to try to stop or slow Tesla's progress. These cretins have proven beyond a reasonable doubt they are not willing to just sit on the sidelines and let things unfold, they will actually take an active role in trying to prevent or slow Tesla from accomplishing their goals. Some of these cretins are well-funded beyond many peoples wildest imagination. Fortunately, we have laws which, coupled with most individuals natural self-interests and capital preservation instincts, prevent the most blatant interference. However, some of them have unimaginably large financial self-interests that are threatened. Others just hate change or progress. When they think they can disrupt or slow Tesla's progress without personal risk, they join forums, spread FUD and even blatant lies, they go on TV, make fake YouTube videos, comment on news stories, fund efforts to hit the share price hard through "dirty trading" or portray the products as crappy and try to cost Tesla money or sales in any way they think they can get away with. There is little doubt this has changed public perception of Tesla (and obviously not for the better). This affects the price at which Tesla can sell their vehicles and it follows that this affects Tesla's financials. Independently of Tesla's financials, it also affects the intangible value people assign to Tesla shares. I would say this latter unquantifiable impact dwarfs whatever share price impact is directly attributable to the impact on Tesla's financials.
To me, it looks like Tesla is on a multi-month bull run caused primarily by good progress with G3 and the perception that Tesla, as a small company, has made it "over the hump" and into the big leagues. This kind of vague change of popular perception is very slow to play out which is why, short of negative news, I expect Tesla to continue to rise as progress with G3 continues. Also, many investors are like lemmings, they don't want to believe a story is a good story until they see the price climbing high. Conversely, when the price is falling, it's all doom and gloom. To many people, a rising price reflects well on the company as silly as that may sound. That is why share prices have "momentum" and is the reason for the age-old market expression "the trend is your friend". Idiotic herd mentality explains how the share price can rise so high, and how it can fall so low. It's not surprising in the slightest and it has little to do with the company's actual prospects.
