Editing Tesla, Inc.
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{{ | {{Logo|[[File:Tesla logo.jpg|150px]]}} | ||
{{Short description|On a mission to accelerate the world's transition to sustainable energy.}} | |||
{| class="wikitable" | |||
|+ Key information | |||
|- | |||
| Risk/return|| [[Risk/return::High]] | |||
|- | |||
| Price per share|| [[Price per share::$703.55]]<ref name=":1">https://uk.finance.yahoo.com/quote/TSLA/profile?p=TSLA</ref> | |||
|- | |||
| Asset class|| [[Asset class::Equities]]<ref name=":2">https://sec.report/CIK/0001318605#:~:text=Tesla%2C%20Inc.%20is%20incorporated%20in,motor%20vehicles%20%26%20passenger%20car%20bodies.</ref> | |||
|- | |||
| Industry|| [[Industry::Consumer Cyclical]]<ref name=":1" /> | |||
|- | |||
| Country of incorporation|| [[Country of incorporation::United States]]<ref name=":2" /> | |||
|- | |||
| Minimum investment amount|| [[Minimum investment amount::$10]]<ref name=":10">https://www.business2community.com/stocks/buy-tesla-stock</ref> | |||
|- | |||
| Maximum investment amount|| [[Maximum investment amount::$728.88 billion]]<ref name=":1" /> | |||
|- | |||
| Current valuation|| [[Current valuation::$728.88 billion]]<ref name=":1" /> | |||
|- | |||
| Investor type|| [[Investor type::All]] | |||
|- | |||
| Bid/ask spread (%)|| [[Bid/ask spread::0.0015063%]]<ref name=":1" /> | |||
|- | |||
| Commission amount|| [[Commission amount::Zero]]<ref name=":10" /> | |||
|- | |||
| Market|| [[Market::Public]]<ref name=":1" /> | |||
|} | |||
==Summary== | |||
{{|* Summary|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. It 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. It 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> | ||
* 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 72%. In other words, an £1,000 investment in the company is expected to return £1,720 in five years time. | |||
* The degree of risk associated with an investment in Tesla is 'high'.}} | |||
* | |||
* The company sells and leases high-performance fully electric vehicles and energy generation and storage systems, and offers services related to its products. It 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. It 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> | |||
* 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 72%. In other words, an £1,000 investment in the company is expected to return £1,720 in five years time. | |||
* The degree of risk associated with an investment in Tesla is 'high'. | |||
==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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Model S is the fastest accelerating and longest ranging car that Tesla provides, with a zero-to-60 miles per hour acceleration of 3.1 seconds and a maximum distance range on a single battery charge of 405 miles, respectively.<ref>https://www.tesla.com/</ref> The price of the car in the US is $99,990.<ref name=":8" /> | Model S is the fastest accelerating and longest ranging car that Tesla provides, with a zero-to-60 miles per hour acceleration of 3.1 seconds and a maximum distance range on a single battery charge of 405 miles, respectively.<ref>https://www.tesla.com/</ref> The price of the car in the US is $99,990.<ref name=":8" /> | ||
[[File:Model S.jpg]] | [[File:Model S.jpg|600px]] | ||
'''Model 3''' | '''Model 3''' | ||
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Model 3 is the lowest priced car that Tesla provides, selling in the US at $46,990. | Model 3 is the lowest priced car that Tesla provides, selling in the US at $46,990. | ||
[[File:Rhd-model-3-social.png]] | [[File:Rhd-model-3-social.png|600px]] | ||
'''Model X''' | '''Model X''' | ||
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Model X is the largest cargo capacity car that Tesla provides, with a cargo capacity of 88 cubic feet. The price of the car in the US is $114,990. | Model X is the largest cargo capacity car that Tesla provides, with a cargo capacity of 88 cubic feet. The price of the car in the US is $114,990. | ||
[[File:MX-Hero-Desktop.jpg]] | [[File:MX-Hero-Desktop.jpg|600px]] | ||
'''Model Y''' | '''Model Y''' | ||
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Model Y is the lowest price per cargo capacity and lowest price per seat car that Tesla provides, at $829 per cubic feet and $8,999 per seat, respectively. The price of the car in the US is $62,990. | Model Y is the lowest price per cargo capacity and lowest price per seat car that Tesla provides, at $829 per cubic feet and $8,999 per seat, respectively. The price of the car in the US is $62,990. | ||
[[File:Model y red.jpg]] | [[File:Model y red.jpg|600px]] | ||
A detailed comparison of the Tesla vehicles is shown in the two tables below. | A detailed comparison of the Tesla vehicles is shown in the two tables below. | ||
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Cybertruck is a truck, a motor vehicle designed to transport cargo, carry specialised payloads, or perform other utilitarian work. What will be unique about the offering is that it will be the safest vehicle that Tesla provides. The price of the offering is expected to be $39,900.<ref>https://www.autoexpress.co.uk/tesla/cybertruck/96447/tesla-cybertruck-delayed-until-least-2023#:~:text=Tesla%20Cybertruck%3A%20performance%20and%20range&text=Entry%2Dlevel%2C%20Single%20Motor%2C,a%20top%20speed%20of%20110mph.</ref> | Cybertruck is a truck, a motor vehicle designed to transport cargo, carry specialised payloads, or perform other utilitarian work. What will be unique about the offering is that it will be the safest vehicle that Tesla provides. The price of the offering is expected to be $39,900.<ref>https://www.autoexpress.co.uk/tesla/cybertruck/96447/tesla-cybertruck-delayed-until-least-2023#:~:text=Tesla%20Cybertruck%3A%20performance%20and%20range&text=Entry%2Dlevel%2C%20Single%20Motor%2C,a%20top%20speed%20of%20110mph.</ref> | ||
[[File:Cybertruck-Hero-Desktop.jpg]] | [[File:Cybertruck-Hero-Desktop.jpg|600px]] | ||
'''Tesla Roadster''' | '''Tesla Roadster''' | ||
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The Tesla Roadster is a car. What will be unique about the offering is that it will be the fastest accelerating and longest ranging car that Tesla provides. The price of the offering is around $200,000.<ref>https://carbuzz.com/cars/tesla/roadster</ref> | The Tesla Roadster is a car. What will be unique about the offering is that it will be the fastest accelerating and longest ranging car that Tesla provides. The price of the offering is around $200,000.<ref>https://carbuzz.com/cars/tesla/roadster</ref> | ||
[[File:Tesla-roadster.jpg]] | [[File:Tesla-roadster.jpg|600px]] | ||
'''Tesla Semi''' | '''Tesla Semi''' | ||
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Tesla Semi is a semi-trailer truck, a motor vehicle that is designed to transport large cargo, via one or more of its attached trailers. What will be unique about the offering is that it will be the largest cargo capacity vehicle that Tesla provides. The price of the offering is around $150,000. | Tesla Semi is a semi-trailer truck, a motor vehicle that is designed to transport large cargo, via one or more of its attached trailers. What will be unique about the offering is that it will be the largest cargo capacity vehicle that Tesla provides. The price of the offering is around $150,000. | ||
[[File:Tesla-semi.jpg]] | [[File:Tesla-semi.jpg|600px]] | ||
======Ride-hailing service====== | ======Ride-hailing service====== | ||
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Powerwall is a energy storage system (i.e. a type of battery).<ref name=":4" /> What’s unique about the offering is that it's the lowest priced energy storage system that Tesla provides, selling at $10,500. The energy capacity of the product is 13.5 kilowatt hour (kWh). To help put the capacity into perspective, in 2020, the average household in the United States consumed 29 kWh per day.<ref>https://www.eia.gov/tools/faqs/faq.php?id=97&t=3#:~:text=How%20much%20electricity%20does%20an,about%20893%20kWh%20per%20month.</ref> So, if the average household is powered from Powerwalls only, then it will require around two Powerwalls to power the whole house, at an average annual cost of $2,247. | Powerwall is a energy storage system (i.e. a type of battery).<ref name=":4" /> What’s unique about the offering is that it's the lowest priced energy storage system that Tesla provides, selling at $10,500. The energy capacity of the product is 13.5 kilowatt hour (kWh). To help put the capacity into perspective, in 2020, the average household in the United States consumed 29 kWh per day.<ref>https://www.eia.gov/tools/faqs/faq.php?id=97&t=3#:~:text=How%20much%20electricity%20does%20an,about%20893%20kWh%20per%20month.</ref> So, if the average household is powered from Powerwalls only, then it will require around two Powerwalls to power the whole house, at an average annual cost of $2,247. | ||
[[File:Powerwall2.jpg]] | [[File:Powerwall2.jpg|600px]] | ||
'''Megapack''' | '''Megapack''' | ||
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Megapack is an energy storage system.<ref name=":4" /> What’s unique about the offering is that it's the largest energy storage system that Tesla provides, at 3.5 megawatt hour. To help put the energy capacity into perspective, each unit has enough energy to power an average of 3,600 homes for one hour. A single Megapack sells for $1,000,000. | Megapack is an energy storage system.<ref name=":4" /> What’s unique about the offering is that it's the largest energy storage system that Tesla provides, at 3.5 megawatt hour. To help put the energy capacity into perspective, each unit has enough energy to power an average of 3,600 homes for one hour. A single Megapack sells for $1,000,000. | ||
[[File:Megapack-CleanerGrid-D.jpg]] | [[File:Megapack-CleanerGrid-D.jpg|600px]] | ||
'''Solar Roof''' | '''Solar Roof''' | ||
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Solar Roof is a roof tile.<ref name=":4" /> What makes the tile unique is that it's the most aesthetically-beautiful, energy generation roof tile. In other words, it's the most beautiful roof tile that generates electricity. | Solar Roof is a roof tile.<ref name=":4" /> What makes the tile unique is that it's the most aesthetically-beautiful, energy generation roof tile. In other words, it's the most beautiful roof tile that generates electricity. | ||
[[File:5c603e0d86d2c7c005d1df44a jVVOsV8.jpg]] | {{Cover Image|[[File:5c603e0d86d2c7c005d1df44a jVVOsV8.jpg|600px]]}} | ||
For the average house in the US, the total cost of having the solar roof is $59,700, or around $3,078 per year over the expected lifetime of the roof (the key assumptions used to determine the expected cost can be found in the table below). To help put the cost into perspective, the average energy bill in the United States is $1,380 per year, so, at the moment, meeting the energy needs of the average US household using the Tesla Solar Roof is 2x more expensive than the alternative. | For the average house in the US, the total cost of having the solar roof is $59,700, or around $3,078 per year over the expected lifetime of the roof (the key assumptions used to determine the expected cost can be found in the table below). To help put the cost into perspective, the average energy bill in the United States is $1,380 per year, so, at the moment, meeting the energy needs of the average US household using the Tesla Solar Roof is 2x more expensive than the alternative. | ||
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# Develop a self-driving capability that is 10x safer than manual, via massive fleet learning; and | # Develop a self-driving capability that is 10x safer than manual, via massive fleet learning; and | ||
# Enable your car to make money for you when you aren't using it. | # Enable your car to make money for you when you aren't using it. | ||
It's worth noting that 10 years earlier than | It's worth noting that 10 years earlier than the 2016 blog post, Elon detailed the company's first master plan<ref name=":9" />, and the company has managed to achieve all of the milestones, which were as follows: | ||
#Build a sports car (i.e. the Tesla Model S); | #Build a sports car (i.e. the Tesla Model S); | ||
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Here, the total addressable market (TAM) is defined as the global automotive market, and based on a number of assumptions, it is estimated that the size of the market as of today (30th May 2022), in terms of revenue, is $3.0 trillion. | Here, the total addressable market (TAM) is defined as the global automotive market, and based on a number of assumptions, it is estimated that the size of the market as of today (30th May 2022), in terms of revenue, is $3.0 trillion. | ||
===Serviceable Available Market=== | ===Serviceable Available Market=== | ||
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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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Ira has served as the Chairman of the Silicon Valley Technology Innovation & Entrepreneurship Forum (SVIEF) for many years. He is also an active leader at Stanford University, where he has served on the Board of Visitors of Stanford Law School and is currently an advisory board member of the Stanford Global Climate and Energy Project (GCEP) and the Stanford Precourt Institute for Energy (PIE) Advisory Council. Ira has also been a guest lecturer, including helping to teach a course on Venture Capital. In addition, Ira served for many years on the Advisory Board of the Forum for Women Entrepreneurs (FWE). | Ira has served as the Chairman of the Silicon Valley Technology Innovation & Entrepreneurship Forum (SVIEF) for many years. He is also an active leader at Stanford University, where he has served on the Board of Visitors of Stanford Law School and is currently an advisory board member of the Stanford Global Climate and Energy Project (GCEP) and the Stanford Precourt Institute for Energy (PIE) Advisory Council. Ira has also been a guest lecturer, including helping to teach a course on Venture Capital. In addition, Ira served for many years on the Advisory Board of the Forum for Women Entrepreneurs (FWE). | ||
Ira received his JD/MBA from Stanford Graduate School of Business and Stanford Law School, where he was an Associate Editor of Stanford Law Review. He holds a B.A. from the University of California, Los Angeles, graduating Phi Beta Kappa and Summa Cum Laude. | |||
'''Larry Ellison''' | '''Larry Ellison''' | ||
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==Financials== | ==Financials== | ||
'''Tesla revenues over the lifetime of the company''' | |||
[[File:Tesla revenues over the lifetime of the company.png]] | |||
=== Historic === | === Historic === | ||
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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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!'''16''' | !'''16''' | ||
!'''17''' | !'''17''' | ||
|- | |- | ||
|'''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" />''' | ||
|''' | |- | ||
|' | | 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 | ||
| | |- | ||
| | |Net profits ($'million)||style="color: red;" |-12||style="color: red;" |-30||style="color: red;" |-78||style="color: red;" |-83|| style="color: red;" |−56 | ||
| | |style="color: red;" |−154 | ||
| | |style="color: red;" |−254 | ||
| | |style="color: red;" |−396 | ||
|''' | |style="color: red;" |−74 | ||
| | |style="color: red;" |−294 | ||
| | |style="color: red;" |−889 | ||
| | |style="color: red;" |−675 | ||
| | |style="color: red;" |−1,962 | ||
| | |style="color: red;" |−976 | ||
| | |style="color: red;" |−862 | ||
| | |721 | ||
| | |5,519 | ||
| | |- | ||
| | | colspan="18" |<div style="text-align: center;">'''Balance sheet'''</div> | ||
| | |- | ||
| | |Total assets<br />($'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 | |||
|- | |||
| 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 | ||
| | |} | ||
=== 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 | ||
|$2, | |$711,102 | ||
|$1, | |$699,445 | ||
|$ | |$667,163 | ||
|$ | |$617,116 | ||
|$ | |$553,551 | ||
|$ | |$481,510 | ||
|$ | |$406,171 | ||
|$21 | |$332,253 | ||
|$ | |$263,564 | ||
|$4 | |$202,749 | ||
|$2 | |$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 | |||
|$2 | |||
|- | |||
|Gross profits ($'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 | ||
|$23, | |$3,702 | ||
|$15, | |$2,160 | ||
|$ | |$1,222 | ||
|$6, | |$670 | ||
|$ | |$357 | ||
|$2, | |$184 | ||
|$1, | |$92 | ||
|$ | |$45 | ||
|$ | |$21 | ||
|$ | |$10 | ||
|$ | |$4 | ||
|$ | |$2 | ||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$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 | ||
| | |$79,069 | ||
|$ | |$60,825 | ||
|$ | |$45,374 | ||
|$ | |$32,824 | ||
|$ | |$23,027 | ||
|$ | |$15,665 | ||
|$ | |$10,335 | ||
|$ | |$6,612 | ||
|$ | |$4,102 | ||
|$ | |$2,468 | ||
|$ | |$1,440 | ||
|$ | |$815 | ||
|$ | |$447 | ||
|$ | |$238 | ||
|$ | |$123 | ||
|$ | |$61 | ||
|$ | |$30 | ||
|$ | |$14 | ||
|$ | |$6 | ||
|$ | |$3 | ||
|$ | |$1 | ||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$1, | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$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=" | | 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 billion. | |||
|- | |||
|What's the estimated terminal annual growth rate of the total addressable market? | |||
|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% | |||
|Stockhub estimates that 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 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 Stockhub suggests using that function here. | |||
|- | |||
|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 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 company suggests 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 | ||
|2, | |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. Stockhub estimates 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. | |||
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 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 (%) | ||
| | |70% | ||
| | |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 70%. | ||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
|- | |- | ||
| | |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%. | |||
|- | |- | ||
| | |Tax rate (%) | ||
| | |21% | ||
| | |Research suggests that it's best to use the marginal tax rate of the country in which the company mainly operates. Tesla mainly operates in the United States, and the marginal tax rate there is 21%. | ||
|- | |- | ||
| | |Depreciation and amortisation as a proportion of revenue (%) | ||
| | |5% | ||
| | |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 5%. | ||
|- | |- | ||
| | |Fixed capital as a proportion of revenue (%) | ||
| | |15% | ||
|Research | |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%. | ||
|- | |- | ||
| | |Working capital as a proportion of revenue (%) | ||
| | |15% | ||
| | |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 | | colspan="3" |'''<div style="text-align: center;">Growth stage 3</div>''' | ||
|- | |- | ||
| | |Cost of goods sold as a proportion of revenue (%) | ||
| | |55% | ||
|Research suggests that | |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 55%. | ||
|- | |- | ||
|Operating expenses as a proportion of revenue (%) | |||
|Operating expenses as a proportion of revenue (%) | |||
|15% | |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 3)<ref name=":7" />, and the margin for its peers is 15%. | ||
|- | |- | ||
|Tax rate (%) | |Tax rate (%) | ||
| | |21% | ||
|Research suggests that it's best to use | |Research suggests that it's best to use the marginal tax rate of the country in which the company mainly operates. Tesla mainly operates in the United States, and the marginal tax rate there is 21%. | ||
|- | |- | ||
|Depreciation and amortisation as a proportion of revenue (%) | |Depreciation and amortisation as a proportion of revenue (%) | ||
| | |5% | ||
|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 5%. | ||
|- | |- | ||
|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%. | ||
|- | |- | ||
|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%. | ||
|- | |- | ||
|Net borrowing ($000) | |Net borrowing ($000) | ||
Line 1,245: | Line 1,032: | ||
|Stockhub suggests that for simplicity, the interest amount figure is zero. | |Stockhub suggests 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 (%) | ||
| | |55% | ||
|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 55%. | ||
|- | |- | ||
|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%. | ||
|- | |- | ||
|Tax rate (%) | |Tax rate (%) | ||
| | |21% | ||
|Research suggests that it's best to use | |Research suggests that it's best to use the marginal tax rate of the country in which the company mainly operates. Tesla mainly operates in the United States, and the marginal tax rate there is 21%. | ||
|- | |- | ||
|Depreciation and amortisation as a proportion of revenue (%) | |Depreciation and amortisation as a proportion of revenue (%) | ||
| | |5% | ||
|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 5%. | |||
|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 | |||
|- | |- | ||
|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 4)<ref name=":7" />, and the amount for its peers is | |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 3%. | ||
|- | |- | ||
|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% | |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%. | ||
|- | |- | ||
|Net borrowing ($000) | |Net borrowing ($000) | ||
|Zero | |Zero | ||
| | |Stockhub suggests that for simplicity, the net borrowing figure is zero. | ||
|- | |- | ||
|Interest amount ($000) | |Interest amount ($000) | ||
|Zero | |Zero | ||
| | |Stockhub suggests that for simplicity, the interest amount figure is zero. | ||
|} | |} | ||
==Risks== | ==Risks== | ||
As with any investment, investing in Tesla carries a level of risk. | As with any investment, investing in Tesla carries a level of risk. Overall, based on the key risks highlighted below, the degree of risk associated with an investment in Tesla is high. | ||
===Risks related to the ability to grow the business=== | ===Risks related to the ability to grow the business=== | ||
Line 1,381: | Line 1,130: | ||
===What's the expected return of an investment in the company?=== | ===What's the expected return of an investment in the company?=== | ||
Stockhub estimates that the expected return of an investment in the company over the next five years is 72%. In other words, an £1,000 investment in the company is expected to return £1,720 in five years time. The assumptions used to estimate the return figure can be found in the table below. | |||
Assuming that a suitable return level over five years is 10% per year and Tesla achieves its expected return level (of | Assuming that a suitable return level over five years is 10% per year and Tesla achieves its expected return level (of 72%), then an investment in the company is considered to be a 'suitable' one. | ||
===What are the assumptions used to estimate the return?=== | ===What are the assumptions used to estimate the return?=== | ||
Line 1,399: | Line 1,148: | ||
#By comparing the investment to other similar investments (i.e. relative valuation). | #By comparing the investment to other similar investments (i.e. relative valuation). | ||
Research suggests that in terms of estimating the expected return of an investment over a period of 12-months or more, the approach that is more accurate is the discounted cash flow approach<ref name=":5">Demirakos et al., 2010; Gleason et al., 2013</ref>, so that's the approach that | Research suggests that in terms of estimating the expected return of an investment over a period of 12-months or more, the approach that is more accurate is the discounted cash flow approach<ref name=":5">Demirakos et al., 2010; Gleason et al., 2013</ref>, so that's the approach that Stockhub suggests to use here; nevertheless, for completeness purposes, separately, the valuation of the company is also estimated using the using the relative valuation approach (the valuation based on the relative approach can be found in the appendix of this report). | ||
Tesla has never paid cash dividends, and on 7th February 2022, it said that it currently does not anticipate paying any cash dividends in the foreseeable future. Accordingly, | Tesla has never paid cash dividends, and on 7th February 2022, it said that it currently does not anticipate paying any cash dividends in the foreseeable future. Accordingly, Stockhub suggests using the free cash flow valuation method (rather than the dividend discount model). | ||
|- | |- | ||
|Which financial forecasts to use? | |Which financial forecasts to use? | ||
| Stockhub | | Stockhub | ||
|The only available long-term forecasts (i.e. >15 years) are the ones that are supplied by the Stockhub | |The only available long-term forecasts (i.e. >15 years) are the ones that are supplied by the Stockhub company (the forecasts can be found in the financials section of this report), so Stockhub suggests using those. | ||
|- | |- | ||
| colspan="3" |'''<div style="text-align: center;">Growth stage 2</div>''' | | colspan="3" |'''<div style="text-align: center;">Growth stage 2</div>''' | ||
|- | |- | ||
|Discount rate (%) | |Discount rate (%) | ||
| | | 8% | ||
|There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital. | |There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital. | ||
|- | |- | ||
|Probability of success (%) | |Probability of success (%) | ||
| | | 100% | ||
| Research suggests that a suitable rate for a company in this growth stage (i.e. stage 2) is | | Research suggests that a suitable rate for a company in this growth stage (i.e. stage 2) is 100%. | ||
|- | |- | ||
Line 1,421: | Line 1,170: | ||
|- | |- | ||
|Discount rate (%) | |Discount rate (%) | ||
| | | 8% | ||
|There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital. | |There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital. | ||
|- | |- | ||
Line 1,432: | Line 1,181: | ||
|- | |- | ||
|Discount rate (%) | |Discount rate (%) | ||
| | | 8% | ||
|There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital. | |There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital. | ||
|- | |- | ||
Line 1,443: | Line 1,192: | ||
|- | |- | ||
|What's the current value of the company? | |What's the current value of the company? | ||
|$ | |$728.88 billion | ||
|As at 5th June 2022, the current value of the Tesla company is $ | |As at 5th June 2022, the current value of the Tesla company is $728.88 billion. | ||
|- | |- | ||
|Which time period do you want to use to estimate the expected return? | |Which time period do you want to use to estimate the expected return? | ||
| Between now and five years time | | Between now and five years time | ||
| | |Stockhub suggests that to account for general market cyclicity, it's best to estimate the expected return of the company between now and five years time. | ||
|} | |} | ||
Line 1,457: | Line 1,206: | ||
#The size of the total addressable market (the default size is $3.0 trillion); | #The size of the total addressable market (the default size is $3.0 trillion); | ||
#Tesla peak market share (the default share is 10%); and | #Tesla peak market share (the default share is 10%); and | ||
#The discount rate (the default time-weighted average rate is | #The discount rate (the default time-weighted average rate is 8%). | ||
The impact of a 50% change in those main inputs to the expected return of the Tesla investment is shown in the table below. | The impact of a 50% change in those main inputs to the expected return of the Tesla investment is shown in the table below. | ||
Line 1,469: | Line 1,218: | ||
|- | |- | ||
|The size of the total addressable market | |The size of the total addressable market | ||
| | |(14%) | ||
| | |72% | ||
| | |158% | ||
|- | |- | ||
|Tesla peak market share | |Tesla peak market share | ||
| | |(14%) | ||
| | | 72% | ||
| | | 158% | ||
|- | |- | ||
|The discount rate | |The discount rate | ||
| | |30% | ||
| | |72% | ||
| | | 136% | ||
|} | |} | ||
Line 2,139: | Line 1,888: | ||
|$312 | |$312 | ||
|} | |} | ||
{| class="wikitable" | {| class="wikitable" | ||
|+ | |+Income statement | ||
!Year end date | !Year end date | ||
!31/12/2021 | !31/12/2021 | ||
Line 2,150: | Line 1,897: | ||
!31/12/2018 | !31/12/2018 | ||
|- | |- | ||
| | |Total Revenue | ||
|$53,823 | |||
|$31,536 | |||
|$24,578 | |||
|$21,461 | |||
|- | |||
|Cost of Revenue | |||
|$40,217 | |||
|$24,906 | |||
|$20,509 | |||
|$17,419 | |||
|- | |- | ||
| | |'''Gross Profit''' | ||
| | |'''$13,606''' | ||
| | |'''$6,630''' | ||
| | |'''$4,069''' | ||
| | |'''$4,042''' | ||
|- | |- | ||
| | |'''Operating Expenses''' | ||
| | | | ||
| | | | ||
| | | | ||
| | | | ||
|- | |- | ||
| | |Research and Development | ||
| | |$2,593 | ||
| | |$1,491 | ||
| | |$1,343 | ||
| | |$1,460 | ||
|- | |- | ||
| | |Sales, General and Admin. | ||
|$4,517 | |||
|$3,145 | |||
|$2,646 | |||
|$2,835 | |||
|- | |- | ||
| | |Non-Recurring Items | ||
| | | style="color: red;" |-$27 | ||
| | | -- | ||
| | |$149 | ||
| | |$135 | ||
|- | |- | ||
|Operating | |Other Operating Items | ||
| | | -- | ||
|6 | | -- | ||
| | | -- | ||
| | | -- | ||
|- | |||
|'''Operating Income''' | |||
|'''$6,523''' | |||
|'''$1,994''' | |||
|style="color: red;" |'''-$69''' | |||
|style="color: red;" |'''-$388''' | |||
|- | |||
|Add'l income/expense items | |||
| $191 | |||
| style="color: red;" |-$92 | |||
| $89 | |||
|$46 | |||
|- | |||
|Earnings Before Interest and Tax | |||
|$6,714 | |||
|$1,902 | |||
|$20 | |||
| style="color: red;" |-$342 | |||
|- | |- | ||
| | |Interest Expense | ||
| | |$371 | ||
| | |$748 | ||
| | |$685 | ||
| | |$663 | ||
|- | |- | ||
| | |Earnings Before Tax | ||
| | |$6,343 | ||
| | |$1,154 | ||
| | | style="color: red;" |-$665 | ||
| | | style="color: red;" |-$1,005 | ||
|- | |- | ||
| | |Income Tax | ||
| | |$699 | ||
| | |$292 | ||
| | |$110 | ||
| | |$58 | ||
|- | |- | ||
| | |Minority Interest | ||
| | | -- | ||
| | | -- | ||
| | | -- | ||
| | | -- | ||
|- | |||
|Equity Earnings/Loss Unconsolidated Subsidiary | |||
| style="color: red;" |-$125 | |||
| style="color: red;" |-$141 | |||
| style="color: red;" |-$87 | |||
|$87 | |||
|- | |||
|Net Income-Cont. Operations | |||
|$5,519 | |||
|$721 | |||
| style="color: red;" |-$862 | |||
| style="color: red;" |-$976 | |||
|- | |||
|'''Net Income''' | |||
|'''$5,519''' | |||
|'''$721''' | |||
| style="color: red;" |'''-$862''' | |||
| style="color: red;" |'''-$976''' | |||
|- | |||
|'''Net Income Applicable to Common Shareholders''' | |||
|'''$5,519''' | |||
|'''$721''' | |||
| style="color: red;" |'''-$862''' | |||
| style="color: red;" |'''-$976''' | |||
|} | |} | ||
{| class="wikitable" | {| class="wikitable" | ||
|+ | |+Financial ratios | ||
! | !Year end date | ||
! | !31/12/2021 | ||
! | !31/12/2020 | ||
!31/12/2019 | |||
!31/12/2018 | |||
|- | |- | ||
| | | colspan="5" |'''Liquidity Ratios''' | ||
| | |||
|- | |- | ||
| | |Current Ratio | ||
|138% | |||
| | | 188% | ||
| | | 113% | ||
| 83% | |||
|- | |- | ||
| | |Quick Ratio | ||
| | |108% | ||
| | |159% | ||
|80% | |||
|52% | |||
|- | |- | ||
| | |Cash Ratio | ||
| | |90% | ||
| | |136% | ||
|59% | |||
|39% | |||
|- | |- | ||
| | | colspan="5" |'''Profitability Ratios''' | ||
| | |||
|- | |- | ||
| | |Gross Margin | ||
| | |25% | ||
| | |21% | ||
|17% | |||
|19% | |||
|- | |- | ||
| | |Operating Margin | ||
| | |12% | ||
| | |6% | ||
| | |0% | ||
|0% | |||
| | |||
|- | |- | ||
|Pre-Tax Margin | |||
|- | | 12% | ||
| | | 4% | ||
| 0% | |||
| | |||
| | |||
|0% | |0% | ||
|- | |- | ||
| | |Profit Margin | ||
|10% | |10% | ||
|2% | |||
|2 | |0% | ||
| | |||
|0% | |0% | ||
|- | |- | ||
| | |Pre-Tax ROE | ||
| | |21% | ||
| | |5% | ||
|0% | |0% | ||
|0% | |0% | ||
|- | |- | ||
| | |After Tax ROE | ||
|18% | |18% | ||
| | |3% | ||
|0% | |0% | ||
|0% | |0% | ||
|} | |} | ||
=== | ===Relative valuation approach=== | ||
As noted earlier in this report, research suggests that in terms of estimating the expected return of an investment over a period of 12-months or more, the approach that is more accurate is the discounted cash flow approach, so that's the approach that Stockhub suggests using to determine the estimated value of the company (the valuation based on the discounted cash flow approach can be found in the valuation section of this report); nevertheless, for completeness purposes, separately, the valuation of the company is also estimated using the using the relative valuation approach. | |||
====What's the expected return of an investment in Tesla using the relative valuation approach?==== | |||
Accordingly, Stockhub estimates that the expected return of an investment in Tesla Inc over the next five years is 4.4x. In other words, an £1,000 investment in the company is expected to return £4,400 in five years time. The assumptions used to estimate the return figure can be found in the table below. | |||
Assuming that a suitable return level over five years is 10% per year and Tesla achieves its expected return level (of 4.4x), then an investment in the company is considered to be a 'suitable' one. | |||
====What are the assumptions used to estimate the return figure?==== | |||
{| class="wikitable" | {| class="wikitable" | ||
|+Key | |+Key inputs | ||
!Description | !Description | ||
!Value | !Value | ||
!Commentary | !Commentary | ||
|- | |- | ||
| | | Which type of multiple do you want to use? | ||
| | | Growth-adjusted EV/sales | ||
| | | For the numerator, Stockhub believes that to account for the different financial leverage levels of its peers, it's best to use enterprise value (EV), rather than price. For the denominator, Stockhub believes that because it expects Tesla to reinvest almost all of its revenue back into the business over the five year forecast period and therefore its earnings are expected to be abnormally low over the period, it's best to use sales. Accordingly, Stockhub suggests valuing its company using the EV/sales ratio. However, Stockhub feels that to take into account the different business lifecycle stages of its peers, the most suitable valuation multiple to use is the growth-adjusted EV/sales multiple<ref group="Note" name="Note15" />, rather than the EV/sales multiple. | ||
|- | |- | ||
| | |In regards to the growth-adjusted EV/sales multiple, for the sales figure, which year to you want to use? | ||
| | |||
| | |Year 5 | ||
|Stockhub suggests that with sales forecast to grow exponential over the five year forecast period, it's best to use forward-looking data, rather than historic data. | |||
In regards to the growth-adjusted EV/sales multiple, for the sales figure, Stockhub suggests that in order to account for the forecasted exponential growth of the business, it's best to use one at the end of the forecast period (i.e. Year 5). | |||
|- | |- | ||
| | |In regards to the growth-adjusted EV/sales multiple, for the sales growth figure, which year(s) do you want to use? | ||
| | |Year 6 to 8, from now | ||
| | |Stockhub suggests that for the sales growth figure, it's best to use Year 6 to 8. | ||
|- | |- | ||
| | |In regards to the growth-adjusted EV/sales multiple, what multiple figure do you want to use? | ||
| | |89x | ||
| | |In Stockhub's view, Tesla closest peer is [[Apple]]. [[Apple]] trades on a multiple of 89x. | ||
|- | |- | ||
| | |Which financial forecasts to use? | ||
| | |Stockhub | ||
|The | |The only available forecasts are the ones that are supplied by the Stockhub company (the forecasts can be found in the financials section of this report), so Stockhub suggests using those. | ||
|- | |- | ||
| | | What's the current value of the Stockhub company? | ||
| | |$688 billion | ||
| | |As at 21st May 2022, the current value of its company at $688 billion. | ||
|- | |- | ||
| | |Which time period do you want to use to estimate the expected return? | ||
|Between now and five years time | |||
|Stockhub suggests that to account for general market cyclicity, it's best to estimate the expected return of the company between now and five years time. | |||
| | |||
| | |||
|} | |} | ||
=== | ===Tesla peer(s)=== | ||
{ | {| class="wikitable sortable" | ||
|+Valuation table | |||
|- | |||
!Investments!! Industry !!Enterprise value/sales!!1-year forward revenue growth rates (%)!!Growth-adjusted enterprise value/sales ratio | |||
|- | |||
| [[Apple]]||Internet content & communication||7.27x<ref name=":0">Morningstar, Inc.</ref>||8.20%<ref name=":0" />|| style="background: blue; color: white;" |89x | |||
|} | |||
===Economic links to cash flow patterns === | ===Economic links to cash flow patterns === | ||
Line 2,673: | Line 2,332: | ||
|Agriculture, Forestry and Land Use | |Agriculture, Forestry and Land Use | ||
|} | |} | ||
== Notes== | == Notes== | ||
Line 3,098: | Line 2,448: | ||
[[Category:Equities]] | [[Category:Equities]] | ||
[[Category:United States]] | [[Category:United States]] | ||
__INDEX__ | __INDEX__ |