Ankur Warikoo, a social media influencer, recently shared a video via his platform advising people on buying Eicher Motors shares instead of a Royal Enfield motorcycle for financial benefit. His claims made sense to a wide variety of audiences on social media. However, a user on LinkedIn did not agree with the logic shared by Warikoo in his video. Before we begin with the details, it is worth mentioning that Eicher Motors is the parent company of Royal Enfield.
As per Ankur Warikoo, if someone had bought shares of the automotive company worth Rs 55,000 in 2001 instead of a Royal Enfield motorcycle, those shares would be worth Rs 22.5 crores now. In his video, he explained that the initial amount would have gradually increased multiple-fold every five years. From Rs 2.5 lakh in 2006 to Rs 8.16 crore in 2021 and eventually to Rs 22.5 crore in 2026.
The user on LinkedIn shared a counter to his logic, saying, "Now imagine, if everyone stopped buying the bike and just started buying the shares, the revenue would drop, the company would go bankrupt soon, and the share price would basically go to zero. You wouldn't even have the bike. The shares gave such returns because people bought the bikes."
The logic, although not completely correct, presents a strong point in favour of the buyers. To support his claims, the social media user said, "Royal Enfield sold nearly 30,000 bikes in the early 2000s and sells nearly 12.5 lakh bikes now."
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He also included the factor of uncertainty associated with the logic through another example. In his post, he said, "He forgot to mention that if you had bought Unitech shares worth Rs 50 lakh instead of a house in 2005, today you would have neither the house nor the money."
Reacting to the post on LinkedIn, multiple social media users supported the counterargument. Multiple users talked about the utility of the motorcycle; others pointed out the uncertainty associated with the share market.