The first recently doubled its value (from about $30 to over $60 per share), while the second hit $1,000 for the very first time (now it's down, but still above $900) and for a while, Tesla was the top carmaker in terms of overall stock value.
Bob Lutz said that there is no rational explanation about the evaluation of the stocks of those companies. It's rather "a mass psychosis." Lutz explains:
- Nikola has yet to produce a vehicle and everything is built on future expectations
- if you are looking for a rational economic expectations of the valuation of Tesla or Nikola there is nothing to be found
- it is a form of a mass psychosis where enough believe that the stock is going to up, everybody wants to own it, so it does go up and it becomes a self-fulfilling prophecy
The humorous thing is that at least Bob Lutz and Elon Musk are finally agreeing on something, as Elon Musk wrote in May that the stock price is too high (despite it being far from $1,000 then).
Bob Lutz operates on an old-school fundamental analysis (a future earning, future profitability), while the market takes into account "psychology, believes, expectations of a brilliant future".
On the other hand, as a long-time skeptic, Bob Lutz said a lot of positive things about Tesla and Elon Musk:
- Elon Musk was behaving somewhat erratically, I didn't think the company had a chance, especially when they had to earn money, when they were under a federal SEC investigation.
Somehow, he managed to dodge the bullet, and I give him all the credit in the world.
- There is no question that Elon is brilliant, and like many brilliant people, he has some somewhat erratic sides, but it doesn't change the fact he's brilliant,
- he has done a remarkable job, Tesla products have improved vastly in quality over the last 18 months, his design work is terrific, so there are good cars, the company appears to be stable, electric vehicles are probably on a growth trend,
- many people were wrong about Tesla, myself included, they are doing a remarkable job with the vehicles, yes, they probably have a pretty good future, but no rational arguments can justify the evaluation like that [compared to GM, VW, Mercedes-Benz], except that everybody believes that it's go up some more