Value Investing

$TSLA: Abandon Traditional Valuation Methods, Sanity

By greenbackd

From the FTAlphaville’s “This is Nuts. When’s the crash?” series:

We argue Tesla cannot be valued on near-term multiple metrics like traditional auto companies given that we expect Tesla to multiply revenues by more than 10x from 2013 to 2016 by nearly 30x by 2020 and around 60x by 2028. We have thus chosen a 15-year time horizon for our DCF which captures the full maturation of the Model S, Model X (and top-hat derivatives) and also the ramp up of its mass market electric vehicle (the Gen 3). We have applied a 11% WACC with a range of 9% to 13%. The terminal value, calculated on a midpoint of 10x EV/EBITDA accounts for roughly 50% of the total DCF value across the range of methodologies we have applied to arrive at our PT.

New base case: a $320 share price, implying an almost $40bn market capitalisation.

New Bull case, $500/share or more than a $60bn valuation.

Tesla sales over the last four quarters: $1.7bn.

Tesla share price over the same period.

TSLA tesla

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