A famous scientist once quipped “I can calculate the motions of the planets, but I cannot calculate the madness of men” after losing a small fortune during the South Sea Bubble.

Today, FT Alphaville is having the same thoughts about Tesla, the $463bn electric carmaker whose valuation has become unhinged from economic reality.

We’ve put the market capitalisation in bold because it really is that nutty. On Monday alone, the stock rose 12.6 per cent, seemingly on the fact of a 5-for-1 stock split. In market cap terms, that’s a $51bn move -- or an entire General Motors, plus some change. In 2019, General Motors shipped 7.7m cars. Tesla? Just over 360,000. In the past 12 months, GM has recorded $8.3bn of ebitda versus $3.5bn for Tesla.

“BuT TeSlA iSnT a cAr CoMpaNy” we hear the bulls howl into the monitors. Perhaps. But at this valuation it really has to stop looking like one, and fast. Whether that will happen anytime soon is another matter. The company stopped growing in the second quarter, but new products like the CyberTruck, the Semi and the Roadster should change that in 2022. That, however, should be viewed in the context of an entirely new vehicle launch this year -- the Model Y -- not stopping its top line from shrinking. (Of course, Covid is also a factor here.)

But anyway, it’s plain old dumb to be discussing fundamentals here when Tesla, with just $800m of free cash flow over the past twelve months, is valued higher than Johnson & Johnson ($17.5bn of free cash flow), Walmart (23bn of free cash flow), and Visa ($11.5bn of free cash flow). Dot-comedy, it seems, has returned to the market. And an end to it doesn’t seem to be in sight.

We’ll leave you with this stat: if Tesla rises another 12.5 per cent today, it will overtake Berkshire Hathaway to become the seventh-biggest company in the whole of the US stock market.

With pre-market indicating a 7.5 per cent rise upon open, it seems foolhardy to suggest that Uncle Warren won’t soon be playing second fiddle to our memelord and saviour Elon Musk.

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