A comparison between Apple, Microsoft, Amazon, Google, Facebook, and Tesla in the past decade. Top chart: last 10 years Bottom chart: last trading year A bubble is an economic cycle that is characterized by the rapid escalation of market value, particularly in the price of assets. This fast inflation is followed by a quick decrease in value or a contraction, which is sometimes referred to as a "crash" or a "bubble burst."
Typically, a bubble is created by a surge in asset prices that is driven by exuberant market behavior. During a bubble, assets typically trade at a price, or within a price range, that greatly exceeds the asset's intrinsic value (the price does not align with the fundamentals of the asset).
The cause of bubbles is disputed by economists; some economists even disagree that bubbles occur at all (on the basis that asset prices frequently deviate from their intrinsic value). However, bubbles are usually only identified and studied in retrospect, after a massive drop in prices occurs.
At the end of a bubble, resources are moved again, causing prices to deflate.
(Investopedia)
How could fundamental analysis explain this phenomenon?
Tesla's stock price has approximately outperformed more than 5x of Amazon, 11x of Apple, 15x of Microsoft, 16x of Facebook, and 30x of Google in the past 10 years. It becomes more interesting if we look at the total annual revenue and net income of these companies..! While Tesla had 31.53 Billion revenue and 690 million net income in 2020, in the very same timeframe, Apple had 274.15 Billion in revenue (9x of Tesla) and 57.41 billion net income (83x of Tesla), Microsoft had 143.01 B in revenue and 44.28 B net income (4.5x, 64x of Tesla), Amazon had 386.06 B in revenue and 21.33 B net income (+12x, 31x of Tesla ), Google had 182.35 B in revenue and 40.27 B net income( 5.8x and 58.36 Of Tesla) and Facebook had 86 B in revenue and 29.15 B net income( 2.7x and 42x of Tesla).
Based on the information provided, you can judge if Tesla is experiencing a bubble or not??? to answer this question, you should divide Tesla's stock price behavior from 2011 to May 2019, and what happened after that.
These other companies are far more mature in their respective markets, with mere organic growth possible. Tesla has greenfield opportunity of 95% of the Auto market to convert from ICE. 90% of the energy market and 100% autonomous ridesharing, with massive software sales to supplement the auto business. Imo You can't compare the last 10 years of these businesses to conclude Tesla is in a bubble.