So in essence you could build a company that produces a marginal product but over hype it to a point where your stock price is high enough that you can just aquire your competitor?
Tesla has demonstrated execution, now they need all the manufacturing capacity they can afford.
I think a more accurate way to describe this would be "The market is speculating that Tesla will eventually be more valuable than legacy automakers."
Tesla doesn't see capital when shares sell in the secondary market. The company raised ~225 million in the IPO at a split adjusted price of $3.5/share. That stock is now worth $580/share and not a penny of that increase went to the company.
Similarly, the market cap at IPO in 2010 was $1.7 billion and is now $580 billion.
The company can get some benefit from high market cap and valuation through borrowing and secondary stock offerings. Since 2010, Tesla has raised about $6 billion in secondary stock sales, which can actually invested in production. But this is about 1% of the cash spent by investors to purchase public stock from each other.
I think they might have raised a bit / issued more shares since IPO (not sure)
Slightly different question: if the stock price increasing doesn't really gain the company any money, why are board executives typically concerned about share price performance? Obviously because they get paid in grants, but... are there any other reasons that actually benefit the company itself instead of the shareholders?
>if the stock price increasing doesn't really gain the company any money, why are board executives typically concerned about share price performance? Obviously because they get paid in grants, but... are there any other reasons that actually benefit the company itself instead of the shareholders?
Board executives represent the interests of the shareholders, not the company. The shareholders literally own the company, and can call a vote to replace the board members. Hell, if the shareholders think it is more valuable to liquidate the company and cash out, they can do it.
EDIT: Making new buildings is the easy part?
Tesla is overvalued, but either we start producing our fuel with electricity or ICE vehicles are doomed - once the price is right.
Other vehicle makers will at very least be interested in diversifying - if not going full electric.
Tesla has done lesser deals with other manufacturers before - as stated by the article - so a full on merger cannot be assumed to be the only thing on the table.
Other desirable agreements might be for things like access to technology (e.g.: batteries) or licenses for Tesla technology - although the former will be dictated largely by the relative production rates (and ramp rates) for the different pieces of all the Tesla pies.
Does anyone know how invasive the hardware for Tesla's self driving is?