Tesla Is Easy To Value In A Market Economy

first fence:

Viewed through that lens — or spreadsheet — Tesla is confounding. Going by the most obvious number, the stock price, Tesla is worth $355 per share and has a market cap of $60 billion.

Business Insider then goes on to discuss all sorts of reasons why that is right or wrong. But in a market economy we don't need any other valuation. Something is worth what people are willing to pay for it and that's it.

Sure, when talking about stock valuations this is trivial. But it's hugely important for the economy as a whole. Something is worth what people are willing to pay for it. Labour is worth what employers will pay, whatever the protestations of the Fight for $15. Rent is what people will pay for an apartment, no matter what rent control advocates will say. Food in Venezuela is worth what people will pay for it, not what the government says it "ought" to be, which is why food has disappeared from the shelves in that benighted country.

Rather more importantly, things are worth whatever people are willing to pay for it whether we have a market economy or not. If we decide, as the European Union once did, that milk is in fact worth more than people will pay for it then we get milk lakes. So too with beef mountains and oodles of undrinkable wine (imagine, alcohol that none will drink).

Things are worth what people will pay for them. People might even be misguided as to the value of Tesla but it's still worth whatever people will pay for it--because that's what people will pay.

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An article pondering on how difficult it is to value Tesla rather fails at the first fence:

Viewed through that lens — or spreadsheet — Tesla is confounding. Going by the most obvious number, the stock price, Tesla is worth $355 per share and has a market cap of $60 billion.

Business Insider then goes on to discuss all sorts of reasons why that is right or wrong. But in a market economy we don't need any other valuation. Something is worth what people are willing to pay for it and that's it.

Sure, when talking about stock valuations this is trivial. But it's hugely important for the economy as a whole. Something is worth what people are willing to pay for it. Labour is worth what employers will pay, whatever the protestations of the Fight for $15. Rent is what people will pay for an apartment, no matter what rent control advocates will say. Food in Venezuela is worth what people will pay for it, not what the government says it "ought" to be, which is why food has disappeared from the shelves in that benighted country.

Rather more importantly, things are worth whatever people are willing to pay for it whether we have a market economy or not. If we decide, as the European Union once did, that milk is in fact worth more than people will pay for it then we get milk lakes. So too with beef mountains and oodles of undrinkable wine (imagine, alcohol that none will drink).

Things are worth what people will pay for them. People might even be misguided as to the value of Tesla but it's still worth whatever people will pay for it--because that's what people will pay.

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Read Again https://www.forbes.com/sites/timworstall/2017/08/19/tesla-is-easy-to-value-in-a-market-economy/

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