Most valuable auto-makers

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Dust Buster
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Most valuable auto-makers

Post by Dust Buster »

Market capitalisation on various bourses (all in US$, quoted in billions) as of 16 June 2020:
Tesla 183 NASDAQ TSLA
Toyota 176 NYSE TM
VW 84 VWAGY
Honda 45 NYSE-HMC
Daimler 44 DDAIF
Ferrari 42 NYSE RACE
BMW 42 BMWYY
GM 40 NYSE GM
Ford 26 NYSE F
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Dan Timberlake
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Re: Most valuable auto-makers

Post by Dan Timberlake »

P/E is a company's Stock Price / Earnings. Some say it indicates if a stock is under or over valued.
In saner times the average P/E for the S&P 500 has historically ranged from 13 to 15.
Note if a company is not earning money, the P/E almost has be crazy high.

It looks like Tesla's P/E is was over 1000 a few days ago, and climbing fast.
https://www.macrotrends.net/stocks/char ... a/pe-ratio

Maybe the velocity of Elon's various ventures will carry thru and avoid bursting what appears to be a mega-bubble driven by speculators/"investors".

AFAIK Henry Ford's evaluation of the stock market rings pretty true.
"As betting at the race ring adds neither strength nor speed to the horse, so the exchange of shares in the stock market adds no capital to business, no increase in the production and no purchasing power to the market."

"Market capitalization"
The true "value" of equipment, facilities and work force, technology, cash on hand and other assets etc does not even appear in that metric. Just the price somebody is willing, for reasons all their own, to pay.

I don't believe variations in the market price of a share of stock changes the capital a business has after the initial offering.
Maybe stock enjoying a higher price stock makes it little easier for a company to borrow money, at least compared to a stock that (due to "public opinion") is in the sh*t.
Dust Buster
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Re: Most valuable auto-makers

Post by Dust Buster »

Different bourses have different average P/E.

In Tesla's case, people seem to be buying the hype or as they may see it, the potential earnings (growth stock – appreciation of stock price rather than an investor relying upon dividends, for example.) The trick is knowing when to sell to lock in the capital gains.

Many companies pay directors at least partially in stocks and base bonuses on stock market performance. Also, after the IPO, companies can raise capital with a rights issue to shareholders and use undistributed shares as collateral when borrowing (better credit rating). Companies can buy other companies with script rather than cash, adding more value (potentially, although most mergers and acquisitions are difficult).

Market capitalisation is the value shareholders place on a share (share price paid) times the number of shares issued.

Agreed – valuation is more about sentiment.
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