Editing Tesla, Inc.
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|date=November 11, 2014 | |date=November 11, 2014 | ||
|access-date=October 3, 2018 |website=Business Insider}}</ref><ref>{{cite web |title=Tesla Energy Generation And Storage Business: Q4 2020 Results |url=https://insideevs.com/news/482496/tesla-energy-generation-storage-q4-2020-results/ | date=January 27, 2021}}</ref><ref>{{cite web |title=Elon Musk |url=https://www.forbes.com/profile/elon-musk/ |website=[[Forbes]]}}</ref><ref>{{cite web | url=https://www.sec.gov/Archives/edgar/data/1318605/000156459021044307/tsla-pre14a_20210813.htm | title=Schedule 14A Information | publisher=[[U.S. Securities and Exchange Commission]]}}</ref><ref name="10K_2022">{{cite web |title=Annual report Form 10-K 2022 Tesla Inc. |url=https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/000095017023001409/tsla-20221231.htm |date=January 31, 2023 |publisher=[[U.S. Securities and Exchange Commission]]}}</ref> | |access-date=October 3, 2018 |website=Business Insider}}</ref><ref>{{cite web |title=Tesla Energy Generation And Storage Business: Q4 2020 Results |url=https://insideevs.com/news/482496/tesla-energy-generation-storage-q4-2020-results/ | date=January 27, 2021}}</ref><ref>{{cite web |title=Elon Musk |url=https://www.forbes.com/profile/elon-musk/ |website=[[Forbes]]}}</ref><ref>{{cite web | url=https://www.sec.gov/Archives/edgar/data/1318605/000156459021044307/tsla-pre14a_20210813.htm | title=Schedule 14A Information | publisher=[[U.S. Securities and Exchange Commission]]}}</ref><ref name="10K_2022">{{cite web |title=Annual report Form 10-K 2022 Tesla Inc. |url=https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/000095017023001409/tsla-20221231.htm |date=January 31, 2023 |publisher=[[U.S. Securities and Exchange Commission]]}}</ref> | ||
}} | }}Tesla is on a mission to accelerate the world's transition to sustainable energy.<ref name=":3">https://www.tesla.com/about</ref> | ||
The company sells and leases high-performance fully electric vehicles and energy generation and storage systems, and offers services related to its products. Tesla emphasises performance, attractive styling and the safety of its users in the design and manufacture of its products and is continuing to develop full self-driving technology for improved safety. The company also strives to lower the cost of ownership for its customers through continuous efforts to reduce manufacturing costs and by offering financial and other services tailored to its products.<ref name=":4">https://www.sec.gov/Archives/edgar/data/1318605/000156459021004599/tsla-10k_20201231.htm</ref> | The company sells and leases high-performance fully electric vehicles and energy generation and storage systems, and offers services related to its products. Tesla emphasises performance, attractive styling and the safety of its users in the design and manufacture of its products and is continuing to develop full self-driving technology for improved safety. The company also strives to lower the cost of ownership for its customers through continuous efforts to reduce manufacturing costs and by offering financial and other services tailored to its products.<ref name=":4">https://www.sec.gov/Archives/edgar/data/1318605/000156459021004599/tsla-10k_20201231.htm</ref> | ||
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Assuming that Tesla increases its share of the automotive market to 10% (from 2%) and other assumptions, the expected return of an investment in the company over the next five years is negative 24%, which equates to an annual return of negative 4%. In other words, an £100,000 investment in the company is expected to return £76,000 in five years time. | Assuming that Tesla increases its share of the automotive market to 10% (from 2%) and other assumptions, the expected return of an investment in the company over the next five years is negative 24%, which equates to an annual return of negative 4%. In other words, an £100,000 investment in the company is expected to return £76,000 in five years time. | ||
The degree of risk associated with an investment in Tesla is 'high', with the shares having a beta that is 112% above the market (2.12 vs. 1) | The degree of risk associated with an investment in Tesla is 'high', with the shares having a beta that is 112% above the market (2.12 vs. 1). | ||
Accordingly, | Accordingly, if your desired annual rate of return is negative 4% or less and/or one of your goals is to accelerate the world's transition to sustainable energy (i.e. you share in the mission of the company), and you are both willing and able to accept the possibility of losing your entire investment amount, then an investment in the company is considered to be a 'suitable' one. | ||
==Operations== | ==Operations== | ||
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The idea of the company came about when the now founding team of the company realised that the current way that humankind is meeting its energy needs is unsustainable and bad for the planet.<ref name=":9">https://www.tesla.com/en_GB/blog/secret-tesla-motors-master-plan-just-between-you-and-me</ref> | The idea of the company came about when the now founding team of the company realised that the current way that humankind is meeting its energy needs is unsustainable and bad for the planet.<ref name=":9">https://www.tesla.com/en_GB/blog/secret-tesla-motors-master-plan-just-between-you-and-me</ref> | ||
Currently, an estimated 85% of the world's energy needs are met by burning fossil fuels<ref>https://wedocs.unep.org/bitstream/handle/20.500.11822/30797/EGR2019.pdf?sequence=1&isAllowed=y</ref>, and energy production and consumption are responsible for 76% of annual human-caused greenhouse gas emissions.<ref | Currently, an estimated 85% of the world's energy needs are met by burning fossil fuels<ref>https://wedocs.unep.org/bitstream/handle/20.500.11822/30797/EGR2019.pdf?sequence=1&isAllowed=y</ref>, and energy production and consumption are responsible for 76% of annual human-caused greenhouse gas emissions.<ref>https://www.climatewatchdata.org/ghg-emissions?breakBy=sector&chartType=percentage&end_year=2018§ors=total-including-lucf&start_year=1990</ref><ref>https://www.wri.org/insights/4-charts-explain-greenhouse-gas-emissions-countries-and-sectors</ref> | ||
Researching into a better way to meet the energy needs, the team concluded that the best way to do so is to move to a solar electric economy, from a mine-and-burn hydrocarbon economy.<ref name=":9" /> | Researching into a better way to meet the energy needs, the team concluded that the best way to do so is to move to a solar electric economy, from a mine-and-burn hydrocarbon economy.<ref name=":9" /> | ||
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[[File:Elon Musk Royal Society (crop2).jpg|200px]] | [[File:Elon Musk Royal Society (crop2).jpg|200px]] | ||
Elon Musk is the Chief Executive Officer of Tesla and has served the position since October 2008 and as a member of the Board since April 2004. Elon has also served as Chief Executive Officer, Chief Technology Officer and Chairman of Space Exploration Technologies Corporation, an advanced rocket and spacecraft manufacturing and services company (“SpaceX ”), since May 2002, and served as Chairman of the Board of SolarCity Corporation, a solar installation company, from July 2006 until its acquisition by Tesla in November 2016. Elon is also a founder of The Boring Company, an infrastructure company, and of Neuralink Corp., a company focused on developing brain-machine interfaces. Prior to SpaceX, Elon co-founded PayPal, an electronic payment system, which was acquired by eBay in October 2002, and Zip2 Corporation, a provider of Internet enterprise software and services, which was acquired by Compaq in March 1999. Elon has also served on the board of directors of Endeavor Group Holdings, Inc. since April 2021. Elon holds a B.A. in physics from the University of Pennsylvania and a B.S. in business from the Wharton School of the University of Pennsylvania. | |||
====Chief Financial Officer==== | ====Chief Financial Officer==== | ||
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==== All periods ==== | ==== All periods ==== | ||
{| class="wikitable" | {| class="wikitable" | ||
|+ | |+Historic financials<ref>Source: Stockhub Limited</ref><ref group="Note" name="Note04" /> | ||
|- | |- | ||
!Year | !Year | ||
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!'''17''' | !'''17''' | ||
!18 | !18 | ||
|- | |- | ||
|'''Year end date'''||'''31/12/2005'''||'''31/12/2006<ref name=":12">{{cite web|url=https://www.mercurynews.com/2014/07/14/2006-san-carlos-start-up-tesla-seeks-sexier-electric-car/|title=2006: San Carlos start-up Tesla seeks sexier electric car|date=July 14, 2014}}</ref><ref name="SEC">{{cite web | url=https://www.sec.gov/edgar/browse/?CIK=1318605 | title=Tesla, Inc. TSLA on Nasdaq | publisher=[[U.S. Securities and Exchange Commission]]}}</ref>'''||'''31/12/2007'''||'''31/12/2008'''||'''31/12/2009''' | |'''Year end date'''||'''31/12/2005'''||'''31/12/2006<ref name=":12">{{cite web|url=https://www.mercurynews.com/2014/07/14/2006-san-carlos-start-up-tesla-seeks-sexier-electric-car/|title=2006: San Carlos start-up Tesla seeks sexier electric car|date=July 14, 2014}}</ref><ref name="SEC">{{cite web | url=https://www.sec.gov/edgar/browse/?CIK=1318605 | title=Tesla, Inc. TSLA on Nasdaq | publisher=[[U.S. Securities and Exchange Commission]]}}</ref>'''||'''31/12/2007'''||'''31/12/2008'''||'''31/12/2009''' | ||
|'''31/12/2010<ref name="SEC" />''' | |'''31/12/2010<ref name="SEC" />''' | ||
|'''31/12/2011<ref name="SEC" />''' | |'''31/12/2011<ref name="SEC" />''' | ||
|'''31/12/2012<ref name="SEC" />''' | |'''31/12/2012<ref name="SEC" />''' | ||
|'''31/12/2013<ref name="SEC" />''' | |'''31/12/2013<ref name="SEC" />''' | ||
|'''31/12/2014<ref name="SEC" />''' | |'''31/12/2014<ref name="SEC" />''' | ||
|'''31/12/2015<ref name="SEC" />''' | |'''31/12/2015<ref name="SEC" />''' | ||
|'''31/12/2016<ref name="SEC" />''' | |'''31/12/2016<ref name="SEC" />''' | ||
|'''31/12/2017<ref name="SEC" />''' | |'''31/12/2017<ref name="SEC" />''' | ||
|'''31/12/2018<ref name="SEC" />''' | |'''31/12/2018<ref name="SEC" />''' | ||
|'''31/12/2019<ref name="SEC" />''' | |'''31/12/2019<ref name="SEC" />''' | ||
|'''31/12/2020<ref name="SEC" />''' | |'''31/12/2020<ref name="SEC" />''' | ||
|'''31/12/2021<ref name="SEC" />''' | |'''31/12/2021<ref name="SEC" />''' | ||
|'''31/12/2022''' | |'''31/12/2022''' | ||
|''' | |- | ||
|' | | colspan="18" |<div style="text-align: center;">'''Income statement'''</div> | ||
| | | | ||
| | |- | ||
| | |Revenues ($'million)|| 0||0||0.073||15||112 | ||
|' | |117 | ||
| | |204 | ||
| | |413 | ||
| | |2,013 | ||
| | |3,198 | ||
| | |4,046 | ||
| | |7,000 | ||
| | |11,759 | ||
| | |21,461 | ||
| | |24,578 | ||
| | |31,536 | ||
| | |53,823 | ||
| | |81,462 | ||
| | |- | ||
| | |Net profits ($'million)||style="color: red;" |-12||style="color: red;" |-30||style="color: red;" |-78||style="color: red;" |-83|| style="color: red;" |−56 | ||
|''' | |style="color: red;" |−154 | ||
| | |style="color: red;" |−254 | ||
| | |style="color: red;" |−396 | ||
| | |style="color: red;" |−74 | ||
| | |style="color: red;" |−294 | ||
| | |style="color: red;" |−889 | ||
| | |style="color: red;" |−675 | ||
| | |style="color: red;" |−1,962 | ||
| | |style="color: red;" |−976 | ||
| | |style="color: red;" |−862 | ||
| | |721 | ||
| | |5,519 | ||
| | |12,556 | ||
| | |- | ||
| | | colspan="18" |<div style="text-align: center;">'''Balance sheet'''</div> | ||
| | | | ||
| | |- | ||
| | |Total assets<br />($'million) | ||
| | |8 | ||
| | |44 | ||
| | |34 | ||
| | |52 | ||
|130 | |||
|386 | |||
|713 | |||
|1,114 | |||
|2,417 | |||
|5,831 | |||
|8,068 | |||
|22,664 | |||
|28,655 | |||
|29,740 | |||
|34,309 | |||
|52,148 | |||
|62,131 | |||
|82,338 | |||
|- | |- | ||
| | | colspan="18" |<div style="text-align: center;">'''Other'''</div> | ||
|''' | |||
| | | | ||
|- | |- | ||
| | |Employees | ||
| | |NA | ||
| | |70 | ||
| | |268 | ||
| | |252 | ||
| | |514 | ||
| | |899 | ||
| | |1,417 | ||
| | |2,914 | ||
| | |5,859 | ||
| | |10,161 | ||
| | |13,058 | ||
| | |17,782 | ||
| | |37,543 | ||
| | |48,817 | ||
| | |48,016 | ||
| | |70,757 | ||
| | |99,290 | ||
| | |127,855 | ||
| | |} | ||
=== Forward === | |||
====What are the financial forecasts?==== | |||
| | {| class="wikitable" | ||
| | |+Forward financials<ref>Source: Stockhub Limited</ref><ref group="Note" name="Note04" /> | ||
| | |- | ||
!Year | |||
!18 !!19!!20!!21!!22 | |||
!23 | |||
!24 | |||
!25 | |||
!26 | |||
!27 | |||
!28 | |||
!29 | |||
!30 | |||
!31 | |||
!32 | |||
!33 | |||
!34 | |||
!35 | |||
!36 | |||
!37 | |||
!38 | |||
!39 | |||
!40 | |||
!41 | |||
!42 | |||
!43 | |||
!44 | |||
!45 | |||
!46 | |||
!47 | |||
!48 | |||
!49 | |||
!50 | |||
!51 | |||
!52 | |||
!53 | |||
!54 | |||
!55 | |||
!56 | |||
!57 | |||
!58 | |||
!59 | |||
|- | |- | ||
| | |'''Year end date'''||'''31/12/2022'''||'''31/12/2023'''||'''31/12/2024'''||'''31/12/2025'''||'''31/12/2026''' | ||
| | |'''31/12/2027''' | ||
| | |'''31/12/2028''' | ||
| | |'''31/12/2029''' | ||
| | |'''31/12/2030''' | ||
| | |'''31/12/2031''' | ||
| | |'''31/12/2032''' | ||
| | |'''31/12/2033''' | ||
| | |'''31/12/2034''' | ||
| | |'''31/12/2035''' | ||
| | |'''31/12/2036''' | ||
| | |'''31/12/2037''' | ||
| | |'''31/12/2038''' | ||
| | |'''31/12/2039''' | ||
| | |'''31/12/2040''' | ||
| | |'''31/12/2041''' | ||
| | |'''31/12/2042''' | ||
| | |'''31/12/2043''' | ||
| | |'''31/12/2044''' | ||
| | |'''31/12/2045''' | ||
| | |'''31/12/2046''' | ||
| | |'''31/12/2047''' | ||
| | |'''31/12/2048''' | ||
| | |'''31/12/2049''' | ||
| | |'''31/12/2050''' | ||
| | |'''31/12/2051''' | ||
| | |'''31/12/2052''' | ||
| | |'''31/12/2053''' | ||
| | |'''31/12/2054''' | ||
| | |'''31/12/2055''' | ||
| | |'''31/12/2056''' | ||
| | |'''31/12/2057''' | ||
| | |'''31/12/2058''' | ||
| | |'''31/12/2059''' | ||
| | |'''31/12/2060''' | ||
| | |'''31/12/2061''' | ||
| | |'''31/12/2062''' | ||
| | |'''31/12/2063''' | ||
| | |- | ||
| | | colspan="43" |<div style="text-align: center;">'''Income statement'''</div> | ||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
|- | |- | ||
| | |Revenues ($'million)|| $78,935||$112,257||$154,816||$207,049||$268,527 | ||
| | |$337,721 | ||
| | |$411,894 | ||
| | |$487,157 | ||
| | |$558,739 | ||
| | |$621,448 | ||
| | |$670,282 | ||
|$701,078 | |||
|$711,102 | |||
|$699,445 | |||
|$667,163 | |||
|$617,116 | |||
|$553,551 | |||
|$481,510 | |||
|$406,171 | |||
|$332,253 | |||
|$263,564 | |||
|$202,749 | |||
| | |$151,247 | ||
|$ | |$109,414 | ||
| | |$76,757 | ||
|$ | |$52,217 | ||
|$ | |$34,448 | ||
|$ | |$22,038 | ||
|$ | |$13,673 | ||
|$ | |$8,226 | ||
|$ | |$4,799 | ||
|$ | |$2,715 | ||
|$ | |$1,490 | ||
|$ | |$793 | ||
|$ | |$409 | ||
|$ | |$205 | ||
|$ | |$99 | ||
|$ | |$47 | ||
|$ | |$21 | ||
|$ | |$9 | ||
|$ | |$4 | ||
|$ | |$2 | ||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$4, | |||
|$2, | |||
|$1, | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|- | |- | ||
| | |Gross profits ($'million)||$23,680||$33,677||$46,445||$62,115||$80,558 | ||
|$101,316 | |||
|$185,352 | |||
|$219,221 | |||
|$251,432 | |||
|$279,652 | |||
|$301,627 | |||
|$315,485 | |||
|$319,996 | |||
| | |$314,750 | ||
|$300,223 | |||
|$277,702 | |||
|$249,098 | |||
| | |$216,679 | ||
|$ | |$182,777 | ||
|$ | |$149,514 | ||
| | |$118,604 | ||
|$ | |$91,237 | ||
|$ | |$68,061 | ||
|$ | |$49,236 | ||
|$ | |$34,541 | ||
|$ | |$23,498 | ||
|$ | |$15,502 | ||
|$ | |$9,917 | ||
|$ | |$6,153 | ||
|$ | |$3,702 | ||
|$ | |$2,160 | ||
|$ | |$1,222 | ||
|$ | |$670 | ||
|$ | |$357 | ||
|$ | |$184 | ||
|$ | |$92 | ||
|$ | |$45 | ||
|$ | |$21 | ||
|$ | |$10 | ||
|$ | |$4 | ||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$3, | |||
|$ | |||
|$1, | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$2 | |$2 | ||
|$1 | |$1 | ||
|- | |- | ||
| | |Operating profits ($'million)||$11,840||$16,839||$23,222||$31,057||$40,279 | ||
|$50,658 | |||
|$123,568 | |||
| | |$146,147 | ||
| | |$167,622 | ||
| | |$186,434 | ||
| | |$201,085 | ||
| | |$210,323 | ||
| | |$213,331 | ||
| | |$209,834 | ||
| | |$200,149 | ||
| | |$185,135 | ||
| | |$166,065 | ||
| | |$144,453 | ||
| | |$121,851 | ||
| | |$99,676 | ||
| | |$79,069 | ||
| | |$60,825 | ||
| | |$45,374 | ||
| | |$32,824 | ||
| | |$23,027 | ||
| | |$15,665 | ||
| | |$10,335 | ||
| | |$6,612 | ||
| | |$4,102 | ||
| | |$2,468 | ||
| | |$1,440 | ||
| | |$815 | ||
| | |$447 | ||
| | |$238 | ||
| | |$123 | ||
| | |$61 | ||
| | |$30 | ||
| | |$14 | ||
| | |$6 | ||
| | |$3 | ||
| | |$1 | ||
| | |$1 | ||
| | |- | ||
| | |Net profits ($'million)||$9,354||$13,302||$18,346||$24,535|| $31,820 | ||
| | |$40,020 | ||
| | |$97,619 | ||
| | |$115,456 | ||
| | |$132,421 | ||
| | |$147,283 | ||
| | |$158,857 | ||
| | |$166,156 | ||
| | |$168,531 | ||
| | |$165,769 | ||
| | |$158,118 | ||
| | |$146,256 | ||
| | |$131,192 | ||
| | |$114,118 | ||
| | |$96,263 | ||
| | |$78,744 | ||
| | |$62,465 | ||
| | |$48,052 | ||
| | |$35,846 | ||
| | |$25,931 | ||
| | |$18,191 | ||
| | |$12,376 | ||
| | |$8,164 | ||
| | |$5,223 | ||
| | |$3,240 | ||
| | |$1,949 | ||
| | |$1,137 | ||
| | |$643 | ||
| | |$353 | ||
| | |$188 | ||
| | |$97 | ||
| | |$48 | ||
| | |$24 | ||
| | |$11 | ||
| | |$5 | ||
| | |$2 | ||
| | |$1 | ||
| | |$0 | ||
| | |} | ||
| | |||
| | ==== What are the assumptions used to estimate the financial forecasts?==== | ||
| | |||
| | {| class="wikitable" | ||
| | |+Key inputs | ||
| | !Description | ||
| | !Value | ||
| | !Commentary | ||
| | |- | ||
| | | colspan="3" | <div style="text-align: center;">'''Revenue'''</div> | ||
| | |- | ||
| | |What's the estimated current size of the total addressable market? | ||
| | |$2,975,000,000 | ||
| | |Here, the total addressable market (TAM) is defined as the global automotive market, and based on a number of assumptions<ref group="Note" name="Note01" />, it is estimated that the size of the market as of today (30th May 2022), in terms of revenue, is $2.975 trillion. | ||
| | |||
| | |||
| | If the TAM is defined as the global energy market, then research suggests that the estimated size of the market is $6.777 trillion.<ref name=":16">https://www.ucl.ac.uk/bartlett/sustainable/sites/bartlett/files/an_exploration_of_energy_cost_ranges_limits_and_adjustment_process.pdf</ref> | ||
| | |- | ||
| | |What is the estimated company lifespan? | ||
| | |60 years | ||
| | |Tesla employs around 110,000, making the company a large organisation (more than 10,000 employees), and research shows that the average lifespan of a large corporation is around 50 years.<ref>Stadler, Enduring Success, 3–5.</ref> | ||
| | |- | ||
| | |What's the estimated annual growth rate of the total addressable market over the lifecycle of the company? | ||
| | |3% | ||
| | |Research shows that the growth rate of the global automotive market (i.e. the total addressable market) is similar to the growth rate of global gross domestic product<ref>http://www.robertpicard.net/files/econgrowthandadvertising.pdf</ref>, which has averaged (medium) around 3% per year in the last 20 years (2001 to 2022)<ref>https://www.macrotrends.net/countries/WLD/world/gdp-growth-rate</ref>. | ||
| | |- | ||
| | |What's the estimated company peak market share? | ||
| | |10% | ||
| | |The Stockhub users estimate that especially given the leadership of the company, the peak market share of Tesla is around 10%, and, therefore, suggests using the share amount here. As of 31st December 2021, Tesla's current share of the market is estimated at around 1.8%. | ||
| | |- | ||
| | |Which distribution function do you want to use to estimate company revenue? | ||
| | |Gaussian | ||
| | |Research suggests that the revenue pattern of companies is similar to the pattern produced by the Gaussian distribution function (i.e. the revenue distribution is bell shaped)<ref>http://escml.umd.edu/Papers/ObsCPMT.pdf</ref>, so the Stockhub users suggest using that function here. | ||
| | |- | ||
| | |What's the estimated standard deviation of company revenue? | ||
| | | 6 years | ||
| | |Another way of asking this question is this way: within how many years either side of the mean does 68% of revenue occur? Based on Tesla's current revenue amount (i.e. $54 billion) and Tesla's estimated lifespan (i.e. 60 years) and Tesla's estimated current stage of its lifecycle (i.e. growth stage), the Stockhub users suggest using 6 years (i.e. 68% of all sales happen within 6 years either side of the mean year), so that's what's used here. | ||
| | |- | ||
| | | colspan="3" |'''<div style="text-align: center;">Growth stages</div>''' | ||
| | |- | ||
| | |How many main stages of growth is the company expected to go through? | ||
| | | 4 stages | ||
| | |Research suggests that a company typically goes through four distinct stages of cash flow growth.<ref>Levie J, Lichtenstein BB (2010) A terminal assessment of stages theory: Introducing a dynamic approach to entrepreneurship. Entrepreneurship: Theory & Practice 34(2): 317–350. <nowiki>https://doi.org/10.1111/j.1540-6520.2010.00377.x</nowiki></ref> Research also shows that incorporating those stages into the discounted cash flow model improves the quality of the model and, ultimately, the quality of the value estimation.<ref>Stef Hinfelaar et al.:, 2019.</ref> | ||
| | |||
| | In addition, research shows that a key way to determine the stage which a company is in is by examining the cash flow patterns of the company.<ref>Dickinson, 2010.</ref> A summary of the economic links to cash flow patterns can be found in the appendix of this report. The Stockhub users estimate that with Tesla's operating cash flows positive (+), investing cash flows negative (-) and its financing cash flows positive (+), the company is in the second stage of growth (i.e. the 'growth' stage), and, therefore, it has a total of three main stages of growth. Note, to account for one-off events, the three-year average (median) amount was used to calculate the cash flows. | ||
| | |||
| | On 7th February 2022, Tesla said it currently expects: to continue to generate net positive operating cash flow as it has done in the last four fiscal years; its capital expenditures to be between $5.00 to $7.00 billion in 2022 and each of the next two fiscal years; and its ability to be self-funding to continue as long as macroeconomic factors support current trends in its sales. Accordingly, based on forward looking statements, it appears that the company is in stage two of the business lifecycle (i.e. the 'growth' stage), and, therefore, it has a total of three main stages of growth remaining. | ||
| | |- | ||
| | |What proportion of the company lifecycle is represented by growth stage 1? | ||
| | |30% | ||
|Research suggests 30%.<ref name=":6">http://escml.umd.edu/Papers/ObsCPMT.pdf</ref> | |||
|- | |||
|What proportion of the company lifecycle is represented by growth stage 2? | |||
|10% | |||
| | |Research suggests 10%.<ref name=":6" /> | ||
|- | |- | ||
| | | What proportion of the company lifecycle is represented by growth stage 3? | ||
|20% | |||
| Research suggests 20%.<ref name=":6" /> | |||
|- | |- | ||
|What | |What proportion of the company lifecycle is represented by growth stage 4? | ||
| | |40% | ||
| | |Research suggests 40%.<ref name=":6" /> | ||
|- | |- | ||
| | | colspan="3" |'''<div style="text-align: center;">Growth stage 2</div>''' | ||
| | |||
|- | |- | ||
| | |Cost of goods sold as a proportion of revenue (%) | ||
| | |79% | ||
|Research | |Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)<ref name=":7">http://people.stern.nyu.edu/adamodar/pdfiles/papers/younggrowth.pdf</ref>, and the margin for its peers is 79%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report. | ||
|- | |- | ||
| | |Operating expenses as a proportion of revenue (%) | ||
| | |15% | ||
| | |Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)<ref name=":7" />, and the margin for its peers is 15%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report. | ||
|- | |- | ||
| | |Tax rate (%) | ||
| | |11% | ||
|Research suggests that | |Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)<ref name=":7" />, and the rate for its peers is 11%. | ||
|- | |- | ||
| | |Depreciation and amortisation as a proportion of revenue (%) | ||
| | |7% | ||
| | |Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)<ref name=":7" />, and the margin for its peers is 7%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report. | ||
|- | |- | ||
| | |Fixed capital as a proportion of revenue (%) | ||
|10% | |||
|Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 2)<ref name=":7" />, and the amount for its peers is 10%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report. | |||
|- | |- | ||
| | |Working capital as a proportion of revenue (%) | ||
| | |15% | ||
|Research suggests that | |Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 2)<ref name=":7" />, and the amount for its peers is 15%. | ||
|- | |- | ||
| | |Net borrowing ($000) | ||
| | |Zero | ||
| | |Stockhub suggests that for simplicity, the net borrowing figure is zero. | ||
|- | |- | ||
| | |Interest amount ($000) | ||
| | |Zero | ||
| | |Stockhub suggests that for simplicity, the interest amount figure is zero. | ||
|- | |- | ||
| | | colspan="3" |'''<div style="text-align: center;">Growth stage 3</div>''' | ||
| | |||
|- | |- | ||
|Cost of goods sold as a proportion of revenue (%) | |||
|62% | |||
|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 3)<ref name=":7" />, and the margin for its peers is 62%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report. | |||
|Cost of goods sold as a proportion of revenue (%) | |||
| | |||
|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage | |||
|- | |- | ||
|Operating expenses as a proportion of revenue (%) | |Operating expenses as a proportion of revenue (%) | ||
| | |13% | ||
|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage | |Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 3)<ref name=":7" />, and the margin for its peers is 13%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report. | ||
|- | |- | ||
|Tax rate (%) | |Tax rate (%) | ||
| | |14% | ||
|Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage | |Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage 3)<ref name=":7" />, and the rate for its peers is 14%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report. | ||
|- | |- | ||
|Depreciation and amortisation as a proportion of revenue (%) | |Depreciation and amortisation as a proportion of revenue (%) | ||
| | |4% | ||
|Research suggests that it's best to use a similar | |Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 3)<ref name=":7" />, and the amount for its peers is 4%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report. | ||
|- | |- | ||
|Fixed capital as a proportion of revenue (%) | |Fixed capital as a proportion of revenue (%) | ||
| | |3% | ||
|Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage | |Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 3)<ref name=":7" />, and the amount for its peers is 3%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report. | ||
|- | |- | ||
|Working capital as a proportion of revenue (%) | |Working capital as a proportion of revenue (%) | ||
| | |10% | ||
|Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage | |Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4)<ref name=":7" />, and the amount for its peers is 10%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report. | ||
|- | |- | ||
|Net borrowing ($000) | |Net borrowing ($000) | ||
|Zero | |Zero | ||
|Stockhub | |The Stockhub users suggest that for simplicity, the net borrowing figure is zero. | ||
|- | |- | ||
|Interest amount ($000) | |Interest amount ($000) | ||
|Zero | |Zero | ||
|Stockhub | |The Stockhub users suggest that for simplicity, the interest amount figure is zero. | ||
|- | |- | ||
| colspan="3" |'''<div style="text-align: center;">Growth stage | | colspan="3" |'''<div style="text-align: center;">Growth stage 4</div>''' | ||
|- | |- | ||
|Cost of goods sold as a proportion of revenue (%) | |Cost of goods sold as a proportion of revenue (%) | ||
| | |99% | ||
|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage | |Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4)<ref name=":7" />, and the margin for its peers is 99%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report. | ||
|- | |- | ||
|Operating expenses as a proportion of revenue (%) | |Operating expenses as a proportion of revenue (%) | ||
| | |15% | ||
|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage | |Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4)<ref name=":7" />, and the margin for its peers is 15%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report. | ||
|- | |- | ||
|Tax rate (%) | |Tax rate (%) | ||
| | |0% | ||
|Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage | |Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage 4)<ref name=":7" />, and the rate for its peers is 0%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report. | ||
|- | |- | ||
|Depreciation and amortisation as a proportion of revenue (%) | |Depreciation and amortisation as a proportion of revenue (%) | ||
| | |37% | ||
|Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage | |Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4)<ref name=":7" />, and the amount for its peers is 37%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report. | ||
|- | |- | ||
|Fixed capital as a proportion of revenue (%) | |Fixed capital as a proportion of revenue (%) | ||
| | | 1% | ||
|Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage | |Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4)<ref name=":7" />, and the amount for its peers is 1%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report. | ||
|- | |- | ||
|Working capital as a proportion of revenue (%) | |Working capital as a proportion of revenue (%) | ||
|10% | | 10% | ||
|Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4)<ref name=":7" />, and the amount for its peers is 10%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report. | |Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4)<ref name=":7" />, and the amount for its peers is 10%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report. | ||
|- | |- | ||
Line 1,278: | Line 1,114: | ||
|Zero | |Zero | ||
|The Stockhub users suggest that for simplicity, the interest amount figure is zero. | |The Stockhub users suggest that for simplicity, the interest amount figure is zero. | ||
|} | |||
==Risks== | |||
As with any investment, investing in Tesla carries a level of risk. Overall, based on the Tesla's adjusted beta (i.e. 2.12), the degree of risk associated with an investment in Tesla is 'high'. | |||
|} | |||
==Risks== | |||
As with any investment, investing in Tesla carries a level of risk. Overall, based on the Tesla's adjusted beta (i.e. 2.12), the degree of risk associated with an investment in Tesla is 'high'. | |||
Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'high' risk, it must have a beta value of 1.5 or more. Further information about the beta ratings can be found in the appendix section of this report. | Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'high' risk, it must have a beta value of 1.5 or more. Further information about the beta ratings can be found in the appendix section of this report. | ||
Line 2,673: | Line 2,475: | ||
|Agriculture, Forestry and Land Use | |Agriculture, Forestry and Land Use | ||
|} | |} | ||
== Notes== | == Notes== |