Hi everyone - this is matt from mad strats. In this video. I want to talk about a tweet that cost billions of dollars. You didn't mishear me that's billion.

With a b on friday may 1st elon musk tweeted tesla stock prices too high. In my opinion. Now i get it, we all have bad days from time to time it's part of being human, but i would be willing to wager that no misstep of yours has cost 14 billion dollars in one careless. Tweet musk caused the stock price of tesla to nosedive from 760 dollars to 683.

By the time the market closed. For the weekend, the stock was down 10. This means 3 billion dollars of elon's personal stake in tesla, vanished into thin air. To make things worse, this isn't the first time elon's tweets have caused a stir.

His infamous 2018 funding secured tweet was worth a fraud charge from the sec, which came with a hefty 40 million dollar fine. Clearly, musk is no stranger to expensive tweets with all of his other recent drama aside, i want to dive into the question: is tesla overpriced? Now there are many metrics investors use to evaluate this question, but i personally believe forward pe and the price to sales ratio. Do the job well as of the close of market on friday tesla's forward pe is 166.6 and the price to sales ratio is 5.63. The next step is to compare these values to other companies to see if there is a disparity.

The big question is what companies are good comparisons for tesla. Your first thought might be to use other us car manufacturers like ford or gm. In truth, though, these are not good benchmarks. Both ford and gm are older companies who are going through rough times.

Their innovation is minimal when compared to tesla tesla has been revolutionizing the car industry and impacting many others. It would be a joke to say the same thing about ford or gm at this moment in time, so what companies should be used? I don't think, there's a perfect answer, but i would look to similarly impactful companies such as amazon and facebook. These two titans have had a massive effect on multiple industries. They have literally altered how people and businesses function across the world.

A simple announcement from one of these guys has the power to upend an industry and seriously hurt competitors within the space i find tesla to be in the same league. So i think considering them to be an apt comparison is reasonable. Amazon has a forward pe of 85.4 and a price to sales ratio of 4.44. Facebook has a forward pe of 27.7 and a price to sales ratio of 8.03.

Keep in mind, as these values go up, the relative cost of the stock is considered to be higher when looking at forward pe. Yes, tesla appears to be overvalued actually by a lot, but it should be noted that this value is an estimate and analysts aren't always correct. The price to sales ratio is a different story, though tesla is in the middle, which indicates it is not overpriced. The truth is, you can find metrics that support whatever your opinion is.

There are many ways to look at this problem, but in my opinion, it would be tough to show that elon was blatantly wrong with that being said, i do think the stock will continue to move down in the immediate future, because the market doesn't typically respond well To erratic behavior and lately elon musk has been nothing short of erratic. What do you think? Do you agree with me or do you think i'm horribly wrong? I would love to discuss it in the comments below, regardless of my opinions, be careful on the markets. Things can obviously change in a moment's notice, thanks for watching until the end. I appreciate the support.

I hope you enjoyed the video if you're interested in this type of content subscribe for more best of luck with your trades and as always, may the odds be in your favor.