There are still some companies that are worth more than Tesla on the stock market, but their number is getting smaller and smaller in view of the rapid rise in prices. In addition, Tesla is already more important to the stock market than this metric alone suggests – according to a report in the Financial Times (FT), an entire financial complex has arisen around the company, including option deals of unprecedented volumes. It is almost impossible to put the Tesla phenomenon into words, said a strategist in the newspaper: It would be like trying to explain the word “upwards” in a two-dimensional world.

More options than stocks trading

With share sales, some of which he had already announced for a long time and which he committed to shortly beforehand via Twitter, CEO Elon Musk put the Tesla share, which had risen sharply, a heavy blow at the beginning of November. But it only fell briefly below the $ 1,000 mark, which was only taken in October. Most recently there was a larger loss of a good 4 percent to $ 1109.03 because Musk again sold almost 1 million shares. But this year Tesla has so far gained 475 billion dollars in value, the FT noted on Tuesday – once all Procter & Gamble or JPMorgan, or twice McDonald’s.

And the high market cap is just the best-known part of the story, according to the newspaper. A whole “financial complex” has already arisen around Tesla, she writes. It consists of other investment instruments based on Tesla, abundant companies that emulate the pioneer on the stock exchange and a derivatives market of unprecedented depth, breadth and hyperactivity. According to some analysts, there may never have been a single company that has such a strong impact on the entire market as Tesla.

In particular, the volume of option deals in Tesla shares currently dwarfs everything, reports the FT. The average last time it was $ 241 billion per day, almost twice as much as Amazon and twice the volume in the entire rest of the S&P 500 index. At Tesla it has always been oversized, today it is huge, said one observer. Without Tesla and Amazon, the volume of stock deals would have exceeded that in options in November, as is normal, or at least was, with them it was significantly lower.

Tesla with its own stock market reality

At the same time, Tesla is creating something like its own reality on the stock exchange. Active fund managers who previously did not want to invest in the company have lost their relative performance lead for this year, the FT reported, citing data from Wells Fargo. Some would now join Tesla, just out of fear of falling further behind, said an investment expert. Anyone who, as a short seller, actively bet against Tesla has even lost a massive amount in absolute terms – all together this year so far 11 billion dollars. Tesla is doing a lot to destroy the remaining credibility of active fund management.

The Tesla share also correlates more strongly with the cryptocurrency Bitcoin than with general market or economic trends. It currently appears to be buoyed by a macro mix of rising inflation expectations and tougher credit markets, but it is often unimpressed by such external trends. Instead, the shares are often driven by specific individual factors, said a quantitative analyst for the FT: for example, Twitter messages from CEO Elon Musk. In addition, not only Tesla itself, but also a completely new industry benefit from the enthusiasm for electric cars on the stock market. Rivian, for example, recently started its first day of trading with a valuation of more than $ 100 billion, while the German start-up Sono Motors started at almost two billion dollars with no sales whatsoever.

Bubble in the Tesla slipstream

At least in the slipstream of Tesla, it looks like bubbles have formed like in the dot-com era – at that time almost everything that sounded like the Internet rose temporarily to lofty heights, and there was also little asked about sales or even profit. How long something like this will last is of course only known afterwards. If there was a real slump at Tesla, it could trigger shock waves across the financial market, according to the FT report. But for that, a lot would obviously have to happen in the current mood: The Tesla minus of around 16 percent within two days at the beginning of the Musk sales was in any case not enough to noticeably upset the entire stock market.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.