Twitter worth more than Tesla? Upside downism

There was interesting news yesterday that electric car manufacturer Tesla raised “double digit millions” from Daimler for a 10 per cent stake. Business Insider (via Jalopnik) does the math and equates the company as being worth certainly less than a billion dollars and goes out on a limb to say it is likely closer to $100m.

Based on Twitter valuations that are flying around at north of $1bn, this means a Web site is worth more than a company whose technology is trying, in a very real way, to change the world. I like knowing about the lives of friends and contacts as much as the next person but I can’t see that as being worth more than a company which is reducing the excessive use of a finite resource, as well as making some super sexy looking cars.

For me, this is unbelievable and completely utterly upside down.

When I said this on Twitter, iancapstick said “why would this signal an "upside down" society? A communications tool worth more than a company, seems about right to me Ed.”

I agree with Ian that Twitter is an important tool (for now!) but I think that he, and others, are ignoring a couple of key issues.

  1. Twitter is at the zenith of it’s hype cycle. Honestly, the only way is down and with 60 per cent of new users giving up after a month it will be hard to sustain growth.
  2. The automobile industry in in the trough of its own economic cycle. The only way is up (surely). Companies are undervalued and those that do have cash reserves are spending them very wisely.

So Twitter is overvalued (some may say overhyped) and the automobile industry is both undervalued and in cash conservation mode. In my humble opinion, this is what is causing this rather discouraging disconnect.

What do you think? Should Twitter be worth more than Tesla?

5 Responses to Twitter worth more than Tesla? Upside downism

  1. Sulemaan says:

    Very astute observations Ed. I wouldn’t lose sleep over this because Twitter’s evaluation of current market cap is definitely not sustainable over the long term. I have no doubts this will correct itself in due course as do all hyped-up evaluations of tech companies.

  2. Ian Capstick says:

    […] 2009-05-21T05:31:35  RT @edlee: posted some expanded thoughts from yesterday's twitter worth more than tesla upside downism [link to post] […]

  3. […] want to subscribe to the RSS feed for updates on this topic.Powered by WP Greet BoxThis morning in a well argued post, Ed Lee suggests that the automaker Tesla should be valued more than Twitter. Why am I pointing […]

  4. good conversation, thanks to ian for pointing to this.

    and somewhat tangentially: the only way is up for automobile companies? i hope not. there are way too many cars in this world. i certainly hope that it’s the only way up for companies like tesla. but the old behemoths? i want them to change, and change seriously, or be gone. (yes, i know, that only works with a radically changed transportation policy around the world – but i can dream, can’t i?)

  5. Jun Loayza says:

    Everything fades. Friendster died, Myspaceis dying, Facebook is lame, Twitter is building up, and Friend Feed is up and coming.

    Everything has its time and everything will fade.

    Just stumbled and submitted your site to Viralogy. Hope you get some great traffic from it.

    – Jun

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