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0 pointstomp9y ago0 comments

Why would the price of the share be relevant (as opposed to e.g. the market capitalization of the company)?

0 comments

I agree. I should have referenced market cap to give a useful argument. My thinking may be wrong, but here's what I have:

1. TSLA is close to it's all time high. SCTY is well below it's all time high (Granted, I don't see it going back to $80+ anytime).

2. TSLA market cap (34.5B) is 70% that of Ford (49.3B) or GM (49.7B). I know Ford and GM are probably undervalued and there are many differences between them and Tesla, but this suggests to me that Tesla is overvalued.

3. Solar City market cap is 2.4 billion. Solar City has a market share in the US of 34% (approx). Solar City market cap compared to the rest of the industry makes sense.

4. The Solar Industry is here to stay. Solar City, as the US leader, is not going bankrupt (the Tesla board of directors agrees with me on this or they would not approve the deal). Investments would swing back to SCTY at some point pushing the stock to $40-$50 (or ~4-5 billion in market cap).

anonbanker9y ago

If anything, Solar City is a (the?) money-making engine for Tesla now. You're correct that your investment is undervalued in the stock split. Contact a good attorney and begin a lawsuit (avoid class-action) against Tesla for this bargain-sale buyout. Makes me wish I had bought SCTY stock for the opportunity to file on my own.

sp3329y ago

jaynos is saying that TSLA is unlikely to go much above $235, but Solar City had a lot of potential to move above $26.70. By converting them now, they've basically thrown away all the potential future movement.

mikeyouse9y ago

The point is, that share prices are absolutely meaningless without the number of shares which just gives you market capitalization. Tesla could just do a 8:1 split and their per-share price would be $30/share -- Would that change their upside? Of course not.

pavlov9y ago

Presumably jaynos meant those prices are relevant in relation to historical prices: Tesla is near all-time highs, while SolarCity's share price has been around $75 at one point.

I do agree with another poster that SolarCity was more likely to be heading towards $0, rather than back to $75.

rhino3699y ago

Potential upside is considered by the market in current pricing.

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