Tesla Valuations
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PIDESales/Invested CapitalCost of capitalEstimated value/sharePrice per shareR
tftf (@talesftf)5510$75-85Model S and X combined at 75-125k/year, Model Gen III at 100-150k/year before TSLA sales growth slows down to industry average bc of growing competition from established car companies in EV/PHEV space. Discounted cash flows at 15%.
RDG034151.5ft10.03%-$8.88$185.24Too many risks, and too many uncertanities related to the future of the company. Right now they produce only one model (from many point of views too expensive), even if another one is coming next year (and maybe few others in the future). My extimate of 55% revenue growth rate is based on the worst growth rate in recent years (but I believe to be optimistic). I do not believe the company could soon get an high operating margin, but even in this case I have estimated an optimistic value.
JCK21000.225.00%$250.00$170.00My realistic/optimistic Outlook
sp191,271From 0.78 to 1.5Starts at 10.03% Stays at 8%$169.93Tesla is a very young company, yet to prove its competitive advantages. I wouldn't place it yet between Peugeot and Audi who have been around for ages. My estimates: Sales to capital ratio starts from current 0.78 and linearly increases each year to reach 1.5 at year 10 and stays there. Revenue increases first 5 years at 50% and then linearly decreases to reach 2.75% growth rate at year 10 onwards. Revenue reaches $26 billion at year 10 which is between Tata Motors and Suzuki in the table. Target pre-tax operating margin is 10% which is actually at the higher end when compared to the bigger auto companies. Final value comes to a negative number, meaning less than its current liquidation value. I can change sales to capital in conjunction with growth rate to bring it to a positive value, but I won't. Conclusion: Tesla should perform significantly better than my estimates, or close shop and return capital back to its shareholders. Auto is a capital-intensive, highly competitive business where excess returns are rare.
Yusuf1.4111.42%$51.17$168.76Generally agree with AD case. Assume a higher unlevered beta 1.5 vs 1.2 and a higher probability of failure 20% vs 10%. The main point of disagreement is that even if the operational goals are feasible investors must demand a higher hurdle rate as this company is very risky.
CT1.4110.03%$60.67$168.76Generally agree with given narrative. Demand is still very strong and will continue for some time but margins will fall as they move into cheaper vehicle segments. Competitors will also put out much stronger vehicles if EV prove to be the future of the car market. No existing company is going to cede the market to Tesla and prices will have to decrease unless it determines margins are more important than market share/revenue.
Ankita1.4110.14%$71.89$168.76A lot of questions regarding the technology remain to be answered, and the high stock price seems to be a reflection more of the market's confidence in Elon's capabilities to do what it takes to make electric cars easy to use and hence increase adoption. Recent demo of a technology which can swap battery and hence 'refuel' the car in under 9 seconds is one such example.
Regardless, it remains a risky investment which justifies a higher beta. Given the large number of auto companies with much larger financial resources, which can add to the supply of EV cars once demand/technology catches up, future revenues may be severely hit. Also assuming a lower operating margin here as they move into lower priced automobile models.
Melissa 1.419.00%$11.70$168.76Think Tesla should be valued as an automobile company, not a tech company therefore a valuation of 15 times revenue is over valued. Investors are increasingly bullish, making it harder for the company to meet expectations, especially since continued success depends on macro factors such as infrastructure for electric cars. This will eventually resulting in a lower valuation, shouldn't buy this stock now.
LBF1.88.00%$59.64$168.76Generally agree with the stated narrative. I am not as optimistic that Tesla will be able to reach the same revenue levels acheivable by Audi. We are making an assumption they are a "automobile" company that specializes in electric cars, which I would argue is overly broad. Im revising revenue growth down modestly. I also am skepitcal about the sales/capital ratio since technology is a large component of Tesla's business model. I am revising that number up slightly. Overall, I do believe Tesla is overvalued as it shouldnt be valued like a pure play tech company but rather more like an automobile company.
Deepak Pallatadka1.4110.03%Negative$168.76I do not agree with the sales projection, I just think that the company has a lot to prove before justifying such a high valuation. I see the sales being $25 Billion tops in year 10 from today and I see most of it coming from battery technology development and not car sales. Also my projection for the operating margin is around 8% max. The problem is just that the price tag on the vehicles is too high and the savings not justified enough to make the switch, thus attracting only collectors for now. Eventually when the battery is affordable enough maybe they ll sell more cars, but that is atleast 10 years out according to me.
TS1.4110.00%$86.47$168.76Assuming higher rate of revenue growth in next couple of years at ~120%, before decelerating. No further alterations to AD's model.
Francesco1.4110.00%$62.41$168.76Telsa´s portfolio is most similar to Porsche (price and design). With current growth rates it may reach Porsche´s revenues in 5 years but I don't consider Telsa will be able to grow further if its product portfolio doesn´t change and without geographic expansion (difficult to see these cars being sold globally). After year 5 I consider a more moderate growth rate (~15% CAGR).
Madhukar1.710.00%$96.73$168.76Optimistically assuming 50% CAGR in revenues over the next 5 years. As it is a tech/auto co, I am assuming a target magin of 20%. Further Sales/Capital invested ratio is assumed to be 1.7 assuming that once the tech becomes better there will be higher operating leverage.
Adrien1.4110.00%$4.12$168.76So far because no sustainable and efficient battery solution exists. However, if Tesla was succesful, it will trigger the rest of the automotive industry to switch focus to EV. Tesla will have a hard time gaining a market share similar to Peugeot or Audi. In case of a technological breakthrough, I see Tesla future as a high end EV manufacturer, with operating metrics similar to Porsche. That's why I assume revenues close to $26 Bn.
Andrew G1.3510.03%$37.76$168.76Higher revenue growth rate because of growth company (90%), lesser margins (10%, definitely lower than the 95 percentile of car companies because of continuing infratstructure and cap maint cost of electronic car technology). Sales to capital 1.35 used. Cost of Capital the same.
Brandon0.85122.630.11.4110.03%$43.91$168.76Optimistically, assuming revenue CAGR over the next five years will be much higher than your initial estimates because I believe there is some innovation happening (how much, one can't be certain). Adjusted the risk of default and the terminal ROIC to more realistic numbers.
Ankur Shah0.526.0730.17210.03%$76.87$168.76I agree with a few others who have posted that the closest comp to Tesla is Porsche. Essentially a low volume and higher margin business relative to other automotive peers. I think the bigger issue impacting margins is what is the correct sales/invested capital level. Porsche has a sales/invested capital level of 0.68. I'm giving Tesla a boost here by assuming it's more of a technology company. But this assumption is in my view equaly as important as margins or revenue growth.
Vivek0.765.40.073.5910.03%$ 53.82$168.00Same Estimates except margin
WC75450.22522.00%$500.00$168.00If Tesla is able to execute it's plan I expect Tesla to be selling a combined 130K Model S and Model X vehicles worldwide combined per year at an average price of $90K equaling 11.25 B in year 5. By year 10 I would include other Model S variants such as a 2 door and a Convertable/Roadster replacement and roughly estimate 10K worldwide sales at an average price of $90 equaling .9B. In addition, in year 10. I expect at least 3 gen 3 vehicles (a coupe, a sedan and a small SUV) to be in full production selling 750,000 annually worldwide at an average price of $55,000 equaling 41.25B. Therefore, my estimate barring worldwide recession or worse from auto sales is 41.25B from Gen 3 plus .9B from new Model S Variants, plus 11.25B equaling 53.4B. This figure does not include income from providing power trains/technology and/or supercharger access to other manufacturers which could result in significant revenue nor does it include revenue from Tesla branded clothing and accessories. Lastly, this does not include revenue from all the backup power stored at the Supercharger stations that could be sold to the power companies for peak usage demands. Some believe this last item has enormous revenue potential, perhaps more than vehicle sales. In conclusion my total worldwide annual revenue projection for 2023 barring a recession is 53B - 100B
shanthi pendyala0.891.750.1252/1.418.00%$92.06$168.00I assumed growth rates of 100% in year 1and declining by 10% every year ending at 10% growth rate in year 10. I assumed a terminal growth rate of 3%.I started with starting cost of capital of 12% and ending WACC of 8%. sales to capital ratio of 2 first 5 years and 1.41 in next 5
0.765.40.1251.4110.58%$42.72$167.15As a new company attempting to revolutionize a mature industry, there are a number of questions that will be only answered over time. One of the lingering questions that could be catastrophic for the company is the durability of the batteries that distinguish and power this tech-centric auto manufacturer. Thus, I increased the probability of failure to 50/50, as well as changed the beta to weigh more towards technology and less towards auto. Like a phone, if you continue to charge the battery overnight, you ruin its durability. Can we expect customers to modify their habits to optimize the vehicles? In addition to customer habits, the Model S and X will require a recharge for 30 minutes after every 2 hours. Though it is the best we can ask for, can we expect customers who are used to 5-10 minute fuel stops to wait, now have to wait a half hour to get back on the road?
0.57538.20.10751.4110.03%$1.24$167.00It has taken nearly a century of significant ups and downs for Audi and Porsche to achieve their respective places in the industry. I think a push into lower-price point market segments via next generation models (ie collaboration with Toyota) will keep margins thinner than Professor's assumption. Further while I believe there is significant acceleration in the hybrid vehicle market, the fixed natural resources associated with the batteries may limit the ability to maintain margins on electric/gas-electric/diesel-electric vehicles versus natural gas vehicles and traditional fuel vehicles - especially abroad where the majority of organic automobile revenue growth is and will continue to come from.
BC0.641.680.151.510.00%$150.63$161.14Assume strong growth in early years to achieve significant market share and enduring competitive advantage from innovation, patents, and ownership of distribution allowing Tesla to earn above average margins and above cost of capital after 10 years
Jed @fantradings728.54%14,767.09220.27%1.689.32%$87.53$169.05Average of all of the above. Pragmatist... General consensus seems to be too optimistic.
C. Philip John0.415.750.028.468.00%$0.00$0.00Musk is not a Jobs, there are three more risks that will determine the success or failure of Tesla. These include battery technology (supply side), adoption risk (demand side) and distribution risk (supply and demand side). (1) Currently available battery technology [1] cannot make the company profitable in long run. With the available technology, there are no clear winners in any of the most important battery design variables. In order to design the right battery, someone needs to solve the unconstrained problem to design the right battery or a new technology needs to be developed and implemented commercially. There is not enough time to develop a better battery in 10 years. In my opinion, valuations are tied to assesments of the expected payoff tied to an expected risk profile(i.e. technology development in the next 10 yrs). (2) The adoption risk with Tesla is similar to the adoption risk of Palm Pilot. Palm was ahead of the S-curve in hardware but behind on the engine (software) to drive Palm. In the case of Tesla, the complimentary product is battery. (3) Tesla needs to pull off an Apple to make company owned dealerships. With limited cash, this will be a perpetual drag on profitability. If they have to franchise, there are enough avenues for channel conflict also. To sum up, a counter agrument would be a joint venture like the Rav 4 EV but Toyota is better positioned to exploit the profit. Reference[1]: http://batteryuniversity.com/learn/article/whats_the_best_battery
aleksey.kucherenko@gmail.com00N/Aa lotvery high$0.000I assigned zero values and N/As based on my view of the brand's perspective in future
Jatin Shah
John0.75830.125210.19%$140.00Targeting a revenue similar to SAIC which would place Tesla in the top 10 in terms of revenue. Potentially I see Tesla as an auto and auto parts company that supplies electric technology to the other incumbents in the industry. Raised the Sales/capital ratio to 2.
Jaan Lainurm0.440$83.36
Ankit0.5260.125I think even 50% CAGR over next 5 years is too high. While it may be a new technology firm, at the end of the day, it is a manufacturing firm (does not have scale benefits like Google or even FB). It is in a very mature industry. Electric cars is not a new concept. Scaling up would get tougher and tougher. Also, success brings competition in a capitalistic world. What does Tesla have that can not be replicated? Elon Musk is a charismatic and successful CEO but is spreading himself thin with too many projects (Hyperloop, Space X etc)
Ashishn.a.I have a very radical view on EVs the company:
1. Battery technology can change drastically, helping it achieve the same growth as Internal Combustion Engine did to auto industry. However, that does not stop other auto companies, unless Tesla develops the technology itself.
2. Solar power technology is also at an inflexion point, perhaps, in a few years, you wont need to charge your batteries quite as frequently as long as the car is in the sun & the hood has a solar panel on top !! Again, nothing stopping competition from entering.
3. Given these factors, I feel that the EV technologies may revolutionize transportation.
4. Will Tesla be at the forefront / driver & be able to derive exclusive economic benefits out of it (similar to Microsoft in PCs, Google in Search, FB in Social Networking, etc.), nobody knows.
5. One possible event - a company other than Tesla, who will provide the path-breaking technology in Battery or Solar panels will be the new game in town worth much more than the auto companies (reminds of Microsoft v/s PC markets like IBM, HP, etc.)

My estimate on
dfp0.4500.0510.00%16395th percentile margins and Audi-level sales seem incompatible.  Mid-size luxury electric vehicles strike me as a niche product - even after becoming "less stupid" and getting there operations sorted, they're going to have to move down-market to the value-level product to attain/maintain scale.  There will be more competion there and therefore margin pressure.  One other comment:  peers seem to have substantial financial services business in their portfolios, contributing to higher margins.  Not sure if this business is compatible with the high-end customer base.  I'm shorting these guys. 
Arvind0.61902041000.00%164.13How many of us would prefer to own a Chevy Volt or a Toyota Prius and how many of us would like to own a BMW or a Tesla? I would rate Tesla to be better than a BMW due to its other technology.innovations and its capability of delivering a mid range priced car and any other car it plans to deliver. I believe the charismatic CEO is not going to rest with one or two products but bring in constant innovation and a range of cars to compete in other segments as well to threaten the bigger guys. I am really optimistic and would imagine them to be in the top 5 car makers. I will expectTesla will deliver revenues close to Ford Motor ($142 B) with a projected revenue of $190 Billion at year 10 at an annual growth rate of 3%. To get to $190 Billion at year 10 the projected annual growth would be 60% per year.
Lorenzo2581021100.00%198I am using realistic/a bit optimistic assumptions
asssssss3081021100.00%198I am using realistic/a bit optimistic assumptions