BEIJING, Feb. 7 (Xinhua) — Tesla is reminiscent of the dotcom bubble, in which many people think its share price is overvalued, but those who try to short their shares are “burned to death”. “The fundamentals are weak, valuations are high and a lot of encouraging good news: this is a typical dotcom bubble and very dangerous for short sellers,” said the Financial Crisis Watch’s monthly global bubble report. “
Tesla fell more than 1 percent in early trading Friday, even after some corrections, its share price has soared 79 percent so far this year.
In the short term, speculation has pushed Tesla’s market value to more than $160 billion, the report said. In the long run, green energy and electric vehicle sweds are taking shape. Therefore, a technical correction is inevitable. In the event of a correction, Tesla’s sky-high valuation (lackof reasonable fundamentals to justify prices) would be the last dagger to puncture the bubble, the report said.
The report also warns the global economy. In the absence of real economic growth, a rise in stocks like Tesla does not mean an increase in wealth. The report said the rise in the share price suggested that the purchasing power of money was declining. “The middle class is already under pressure to resemble a recession. As the cost of living exceeds the increase in real wages, most people continue to become poorer. Even as the stock market rises, their health care, college fees and taxes are rising, and most people are already living in recession. “