Aswath Tesla: Valuation in July 2016
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NameDate of valuationValue/SharePrice/SharePrice/ValueYour Tesla story
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Aswath DamodaranJuly 14, 2016$151.85$221.0045.54%Auto/tech company looking towards the mass market. Primary competitive advantage is superior technology (battery). Its reinvestment needs will be closer to tech than auto companies.
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9/13/2016$172.34$196.0513.76%Capital intensive car company with a lot of R&D ahead of it. Historically slow adoption of new tech (e.g., GPS and airbags in the past, batteries and autopilot in the future) into auto market due to customer wariness, but industry has many at-scale competitors who are quick to copy. However, brand and quality will command significant premium and growth in years 5-10 when company gets cost/unit down across car/battery combo and charging stations become more widespread.Median Value/////
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Derek Meitzer9/13/201698.06196.0599.93%Low effective tax rates and doubling of revenue over next five years would ideally paint a prettier picture, however, current negative operating margin and high degrees of expected required-reinvestment reduce foreseeable value to half of current trading priceMedian Price/Value90.17%
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Guillermo Martin Espallargas
9/13/2016121.66196.0561.15%Auto company which targets the mass market by leveraging on its brand (pushed by eccentric CEO) and state-of-the-art technology. It has also enjoyed 1st mover advtg. with the S model as the first full-size all-electric high-end vehicle. Now the Tesla brand has earned its own reputation worldwide and it aims to target the mass market with the Model 3. However, the company is still on early stages of its development which, in combination with the problems faced with batteries and auto-pilot, rises its capex needs and its bankruptcy risk. It’s future is even more uncertain after the acquisition of SolarCIty.
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Jorge Fernandez-Cuervo
9/13/2016$28$196.05600.18%
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Arthur Khaykin9/13/2016$92.84196.05111.17%Tesla will have strong growth in revenue due to penetrating both the Electric car as well traditional car market. With the Model 3 having already 400,000 pre-orders, Tesla will be able to raise additional capital to further expand its operations. But the company has to further fix its cost structure to become profitable (very important for shareholders). With its current and near term operating profit margin being negative, as well as having high future CAPEX ( the gigawatt factory and future model 3 as well as the continuation of producing the model S and X), Tesla will continue to have negative future FCFF for the forseeable future. This will negatively affect the company's current intrinsic stock value.
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Andrea Peñaherrera9-13-2016$98.61$196.0598.81%Tesla has to invert more in SolarCity to consolidate the firm, therefore, the company is not going to grow up easily in a short term. Moreover, the lithum, which is a material used in their batteries is only found in Bolivia, Chile and Argentina. This material is going to exhaust faster with more competence
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Moideen Kalladi9/13/2016$69.17$196.05183.43%Tesla's recent dubious Solar City acquisition, the extended low oil price regime, and low interest rates suggest that it may be hard for the firm to raise the capital it needs to grow. I have assumed a lower risk-free rate, a higher sales-to-capital ratio and a higher probability of failure to reflect my own views on Tesla.
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Li Lin9-14-2016$169.51196.0515.66%Acquiring SolarCity allows Tesla to exploit the advantages of vertical integration in a fragmented energy sector. Furthermore, this merger has the potential to set up Tesla as one of the first movers in creating the next generation of a combination solar- and battery- powered vehicle, thereby decreasing the number of visits to charging stations, which would be a significant competitive advantage, not to mention furthering their image as environmentally friendly. This is several years down the road. I do expect some early challenges in the near future as they integrate with SolarCity, as well as focusing on meeting the release date for the Tesla 3, which will be a late entrant into the game. This will certainly divert attention away from their main business, but should ultimately settle down after a few years.
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Howard Zhang9-14-2016$59.02168.76185.94%Weaker revenue growth over next 5 years due to sustained lower oil prices leading to lower demand in energy efficient products produced by both Tesla and Solar city.
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Ammar Jilani9-14-2016225.41196.35-12.89%Revenue growth at 50% for 5 years reaching $50 billion in 6 years (about 1 million cars). Higher end state profit margin (+15%) after 10 years, however I subscribe to a higher possibility of bankruptcy (20%) as well.
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Maxwell Seibald9/14/201698.38196.3599.58%Based on recent compoudned growth rates, I believe a fair growth rate for the next 5 years is 40%.
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Amanda Luskin9/14/201687.13196.3125.30%Solar City acquisition increases the possibility of failure slightly. Lower reinvestment and higher cost of capital in line with industry averages as an electronics company, rather than an auto company.
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Hisham Mannaa9/14/2016144.3196.4136.11%Auto Company targeting mass market. Lower EBIT Margin to 10% as Auto Companies are on average is single digit EBIT Margin Business. Higher Revenue Growth to 55% as the new model rollout and pipeline is quite impressive and is already on target to surpass that number. Higher Sales to capital ratio (2.5) as management accumen warrents a higher than average level of effeciency. 5% probability of failure (reduced from 10%) due to management's accumen.
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Greg Etling9/1459.01196.41232.84%Auto/tech company (70/30) targeting mass market but struggling to deliver at promised scale. Lack of focus, manifest in SCTY acquisition, is undercutting TSLA's ability to hit production targets and public deadlines. Growth is therefore still robust, but margins will remain tighter and revenues lower than they could be under different management.

[Updated Risk-Free/Revenue/OI to current numbers since July 2016. Lowered 5 year CAGR to 40% on expected production misses. Lowered EBIT margin to 10% on closer to industry average expected efficiency. Accepted Sales/Capital ratio and Lease/R&D calculations as-is.]
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Alpha Baid9/14/201676.06196.41158.23%A company manufacturing superior electric vehicles promising quality, reliability and efficiency. The company also deals with storage batteries. The company is trying to build an electric car ecosystem by opening charge stations across the city too. Tesla, can achieve a pioneer status by building this ecosystem, and can also synergise the solar city acquisition. The revenue growth sould be high provided the competitors dont catch up in the timeline of order to delivery.
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Jeremy Ensweiler9/15/2016147.35196.4133.29%Adjusted for current stock price and changed terminal growth from 1.47 to 1.0 assuming that Telsa will stabilize
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Aminarta Kumari9/16/2016$101.72$205.00101.53%I view Tesla as an Auto/Electrical company gradually moving towards the mass market. Though, technology is the area of focus which provides competitive advantage, in my opinion, it is a facilitator of the core business idea. Lowered EBIT Margin to 10% as Auto/Electrical companies have on an average single digit EBIT margin. Lowered Revenue Growth to 45% considering past growth and history of delivery shortfalls. Lowered Sales to Capital ratio to 2.0. Changing the industry from Electronics to Electrical Equipments reduced the Cost of Capital. After the acquisition of Solar City, the business model going forward may evolve as a combination of Auto/Sustainable Energy.
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Tobias Classen9/17/2016$173.03$205.3218.66%I see Tesla strongly following its Mission in a) being rather a battery producer than a pure car manufacturer and b) consistently following its mission to produce a car affordable for the mass. As a european manager explained to us during a company fair in Barcelona, this first steps (high end car Tesla Model S etc.) were necessary for Tesla to produce the cheap mass car eventually. With the launch of Model 3 end 2017 selling a car for a 35.000USD base price the story seems convincing. Thats why I believe in a rather 60% revenue CAGR within the next years. However, I feel the EBIT margin will suffer and be around 10% mid-term.
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Nick Piercy9/17/2016$247.45$205.32-17.03%Tesla becomes a diversified company, where end-to-end technical integration produces a lasting competitive advantage affecting multiple industries including transportation (Uber-like autonomous fleet), Solarcity acquisition is successful, and more contracts such as Los Angeles Powerpacks. CAGR 50%, Sales to capital ratio 1.2, EBIT 15.5%, cost of capital 6.1%.
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9/18/2016$95.88205.4114.23%Tesla continues to be a story for the future with unfulfilled promise. Very possible that by expanding it's product line to include more low priced options could see it turn aroun it's negative earnings. However, it still faces some clear challenges, which include producing cars to meet the demand necessary to achieve positive earnings along with avoiding large scale technical defects and recalls. Additionally, the longer the company takes to start returning on its investment the more time it gives to competitors like Google and Apple who are trying to push the car forward as a piece of technology rather than an automobile.
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Phongsakdi Tangjaijaroen
9/18/201667.35205.4204.97%According to Growth rate and Sale to Capital ratio comparing among peer both industry and global, I made some adjustment in both factors. Growth rate of Tesla is approximate at 40% due to risk namely cyclical and focus namely high end or mass. However, the growth rate that I use is still higher than industry because of compettive edge such as first mover. Another adjusted factor is Sale to Capital ratio. Even though Tesla acquied Solar City recently, the investment is not aggressive as everyone believe. So, I decided to apply this ratio at 2 times. There is only EBIT to Sales maininting at 12%. If the EBIT to Sales is lower than 12%, Tesla is not interested anymore.
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Avishee Gupta9/18/2016104.82205.495.95%Lowered growth rate gradually until reaching 40% in year five. Increased proabilty of failure. Tesla's success to date has been tied to its unique technology which can easily be replicated by competitors in the auto space. If a majority of its business is tied to the auto space, it is companies that are revolutionalizing transportation (Uber, Google) that Tesla competes with.The Tesla brand loyalty may be nothing more than a short term fad so 50% growth for 5 years seems unlikely.
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Luis Garcia9/20/2016127.41204.460.43%Changed the growth rate (for the first 5 years) a little bit from 50% to 47%. I believe in the power of a well-crafted brand and think Tesla is doing it very well. However I think the demand for high-end cars will be lower than expected.
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Chris Hendy09/20/2016135.12204.6451.45%I changed sales/capital to 2.00% since I think moving into autonomous vehicles will require significant reinvestment
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Shanshan Cao09/20/2016121.6204.6468.29%Its acquisition of solar city may make its 50% growth rate for the next 5 years to be overoptimistic, so I changed the growth rate to 45% and applied effective tax rate of 26.49%
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Michael Costanza10/01/16110.65204.0384.39%Primary driver of valuation due to lowered growth assumption - increased competition and lower adoption of electronic vehicles.
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115-100.00%
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Ashrit Kasshyap16/1/1762237.75283.47%a auto comapany with signifiacnt competitive advantage from its technology and brand. i assumed a 40% growth rate initially, which is lower due to the huge capex and R&D it'll have to do to maintain the competetive advantage.
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6000-100.00%
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