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Tesla, Inc. and Phoenix Group Holdings plc: Difference between pages

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[[File:Tesla logo.jpg|150px]]
Phoenix Group Holdings is committed to helping people achieve a secure financial future, offering innovative retirement solutions and long-term savings products.


Helping to accelerate the world's transition to sustainable energy.
The company operates as a leading UK life and pensions provider, specialising in retirement solutions, long-term savings, and investment management. Phoenix prioritises the delivery of value-driven investments with a strong emphasis on environmental, social, and governance (ESG) principles, ensuring that its investment portfolios align with the evolving needs of its customers and society. Phoenix also focuses on managing long-term liabilities and capital efficiency, seeking to provide sustainable financial growth while supporting the retirement security of its policyholders.


{| class="wikitable"
Assuming Phoenix Group maintains a steady market position in the life insurance and pensions sectors, with modest growth in its asset management services, the expected return of an investment in the company over the next five years is positive 16%, which equates to an annual return of 3.1%. In other words, an £100,000 investment in Phoenix Group is expected to return £116,000 in five years' time.
|+ Key information
 
|-
The degree of risk associated with an investment in Phoenix Group is ‘moderate’, with the shares having a beta that is 22% below the market (0.78 vs. 1). Additionally, Phoenix Group’s shares show a ‘medium’ level of liquidity, as evidenced by its bid-ask margin of 0.02%.
| Risk/return|| High
 
|-
Accordingly, based on the assumptions provided on the Stockhub platform, an investment in the company is considered to be a ‘suitable’ one for you if, among other criteria, your required:
| Price per share|| $663.90
|-
| Asset class|| Equities
|-
| Industry|| Consumer Cyclical
|-
| Country of incorporation|| United States
|-
| Minimum investment amount|| $10
|-
| Maximum investment amount|| $687.81 billion
|-
| Current valuation|| $687.81 billion
|-
| Investor type|| All
|-
| Tax schemes|| None
|-
| Bid/ask spread (%)|| 0.0015063%
|-
| Commission amount|| N/A
|-
| Market|| Public
|}


==Summary==
* Return level is 3.1% per year or more in absolute terms;
* Risk level is 22% below the market risk level;
* Time horizon is five years or longer;
* Bid-ask margin is 0.02% or more; and/or
* Objective is to invest in a stable, long-term provider of pensions and insurance solutions that aligns with responsible investment principles.


* Tesla is on a mission to accelerate the world's transition to sustainable energy.
'''Fun fact:''' Phoenix Group Holdings was founded in 1782 and has grown into one of the UK’s largest providers of long-term savings and retirement solutions. It primarily focuses on closed life funds and the acquisition of life insurance businesses.
*The company designs, develops, manufactures, 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.
* Based on a number of 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 ==


=== How did the idea of the company come about? ===
=== How did the idea of the company come about? ===
Tesla was founded in 2003 by a group of engineers who wanted to prove that people didn’t need to compromise to drive electric – that electric vehicles can be better, quicker and more fun to drive than petrol-powered cars.<ref>https://www.tesla.com/about</ref>
Phoenix Group Holdings was created with the aim of acquiring and managing closed life insurance and pension funds. Founded in 2009, it evolved from the Phoenix Assurance Company, which had traditionally provided life insurance. The modern group focused on acquiring legacy insurance portfolios—companies that no longer wrote new policies but still had substantial liabilities. By acquiring underperforming insurers, Phoenix aimed to improve efficiency, optimise capital, and unlock value from these closed books, growing into a major consolidator in the UK life insurance sector.


=== What's the mission of the company? ===
=== What's the mission of the company? ===
 
The mission of Phoenix Group Holdings is to deliver long-term value for its shareholders, policyholders, and other stakeholders by efficiently managing and growing closed life insurance and pension businesses. The company focuses on maximising the value of legacy insurance portfolios through operational improvements, capital optimisation, and the responsible management of policyholder liabilities. Their goal is to ensure financial security for policyholders while achieving sustainable, profitable growth for investors.
Tesla is a company that's on a mission to accelerate the world's transition to sustainable energy. In other words, the company's objective is to accelerate the world's transition to energy that meets the needs of the present without compromising the ability of future generations to meet their own needs.


=== What are the main offerings of the company? ===
=== What are the main offerings of the company? ===
Phoenix Group Holdings primarily offers closed-book life insurance and pension solutions. Their key offerings include:


The company's main offerings fall into two main segments: (1) automotive and (2) energy generation and storage.
# '''Life Insurance:''' Managing legacy life insurance policies that are no longer open to new customers, focusing on optimising the value of existing portfolios.
 
# '''Pension Schemes:''' Overseeing pension funds and annuities for individuals and institutions, ensuring they are managed efficiently.
==== Automotive ====
# '''Asset Management:''' The company offers investment management services for the assets backing its insurance and pension liabilities.
 
# '''Investment and Capital Management:''' Phoenix Group aims to enhance the value of its acquired portfolios through strategic capital management, risk optimisation, and operational efficiency.
The automotive segment includes the design, development, manufacturing, sales and leasing of electric vehicles as well as sales of automotive regulatory credits. Additionally, the automotive segment is also comprised of other services including non-warranty after-sales vehicle services, sales of used vehicles, retail merchandise, sales by the company's acquired subsidiaries to third party customers and vehicle insurance revenue.
 
===== Current offerings =====
 
====== Automotive sales ======
The company offers four main car models: Model S, Model 3, Model X and Model Y.
 
'''Model S'''
 
<u>Target audience</u>
 
The target audience is people who are relatively more innovative in their thinking.
 
<u>What is the offering?</u>
 
Model S is a car, a wheeled motor vehicle used for transportation.
 
[[File:Model S.jpg|600px]]
 
<u>What’s unique about the offering?</u>
 
Model S is the fastest accelerating and longest ranging car that Tesla provides.
 
{| class="wikitable"
|+Competition comparison
!Category
!Model S
!Model 3
!Model X
!Model Y
|-
|Is the car fully electric?
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
|-
|What's the top acceleration of the car?
| style="background: green; color: white;" |3.1 seconds
| style="background: red; color: white;" |5.8 seconds
| style="background: orange; color: white;" |3.8 seconds
| style="background: orange; color: white;" |4.8 seconds
|-
|What's the maximum distance range of the car on a single battery charge?
| style="background: green; color: white;" |405 miles
| style="background: red; color: white;" |272 miles
| style="background: orange; color: white;" |348 miles
| style="background: orange; color: white;" |330 miles
|-
|What's the top speed of the car?
| style="background: green; color: white;" |155 miles per hour
| style="background: orange; color: white;" |140 miles per hour
| style="background: green; color: white;" |155 miles per hour
| style="background: red; color: white;" |135 miles per hour
|-
|Is the design of the car attractive?
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
|-
|Is the car safe?
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
|-
|How many seats does the car have?
| style="background: red; color: white;" |5 seats
| style="background: red; color: white;" |5 seats
| style="background: green; color: white;" |7 seats
| style="background: green; color: white;" |7 seats
|-
|What's the cargo capacity of the car?
| style="background: orange; color: white;" |28 cubic feet
| style="background: red; color: white;" |23 cubic feet
| style="background: green; color: white;" |88 cubic feet
| style="background: orange; color: white;" |76 cubic feet
|-
|Which drive wheel does the car have?
| style="background: green; color: white;" |All-wheel drive
| style="background: red; color: white;" |Rear-wheel drive
| style="background: green; color: white;" |All-wheel drive
| style="background: green; color: white;" |All-wheel drive
|-
|What's the price of the car?
| style="background: orange; color: white;" |$99,990
| style="background: green; color: white;" |$46,990
| style="background: red; color: white;" |$114,990
| style="background: orange; color: white;" |$62,990
|-
|What's the vehicle's price per cargo capacity?
| style="background: red; color: white;" |$3,571 per cubic feet
| style="background: orange; color: white;" |$2,043 per cubic feet
| style="background: orange; color: white;" |$1,307 per cubic feet
| style="background: green; color: white;" |$829 per cubic feet
|-
|What's the vehicle's price per passenger?
| style="background: red; color: white;" |$19,998 per passenger
| style="background: orange; color: white;" |$9,398 per passenger
| style="background: orange; color: white;" |$16,427 per passenger
| style="background: green; color: white;" |$8,999 per passenger
|}
 
{| class="wikitable"
|+Which car is the winner in the following categories?
!Category
!Winner
|-
|Which Tesla car has the fastest acceleration?
|Model S
|-
|Which Tesla car has the longest range?
|Model S
|-
|Which Tesla car has the largest cargo capacity?
|Model X
|-
|Which Tesla car is the lowest priced?
|Model 3
|-
|Which Tesla car has the lowest price per cargo capacity?
|Model Y
|-
|Which Tesla car has the lowest price per passenger?
|Model Y
|}
 
<u>What is the price of the offering?</u>
 
The price of the car in the US is $99,990.
 
<u>From which place(s) is the offering able to be purchased?</u>
 
The main places that the offering is able to be purchased is through the company's website (at [https://www.tesla.com www.tesla.com]) and company's stores.
 
<u>From which place(s) is the offering promoted?</u>
 
The main way that Tesla promotes the offering is through media coverage and word of mouth.
 
'''Model 3'''
 
<u>Target audience</u>
 
The target audience is people who are relatively more innovative in their thinking.
 
<u>What is the offering?</u>
 
Model 3 is a car, a wheeled motor vehicle used for transportation.
 
[[File:Rhd-model-3-social.png|600px]]
 
<u>What’s unique about the offering?</u>
 
Model 3 is the lowest priced car that Tesla provides.
 
<u>What is the price of the offering?</u>
 
The price of the car in the US is $46,990.
 
<u>From which place(s) is the offering able to be purchased?</u>
 
The main places that the offering is able to be purchased is through the company's website (at [https://www.tesla.com www.tesla.com]) and company's stores.
 
<u>From which place(s) is the offering promoted?</u>
 
The main way that Tesla promotes the offering is through media coverage and word of mouth.
 
'''Model X'''
 
<u>Target audience</u>
 
The target audience is people who are relatively more innovative in their thinking.
 
<u>What is the offering?</u>
 
Model X is a car, a wheeled motor vehicle used for transportation.
 
[[File:MX-Hero-Desktop.jpg|600px]]
 
<u>What’s unique about the offering?</u>
 
Model X is the largest cargo capacity car that Tesla provides.
 
<u>What is the price of the offering?</u>
 
The price of the car in the US is $114,990.
 
<u>From which place(s) is the offering able to be purchased?</u>
 
The main places that the offering is able to be purchased is through the company's website (at [https://www.tesla.com www.tesla.com]) and company's stores.
 
<u>From which place(s) is the offering promoted?</u>
 
The main way that Tesla promotes the offering is through media coverage and word of mouth.
 
'''Model Y'''
 
<u>Target audience</u>
 
The target audience is people who are relatively more innovative in their thinking.
 
<u>What is the offering?</u>
 
Model Y is a car, a wheeled motor vehicle used for transportation.
 
[[File:Model y red.jpg|600px]]
 
<u>What’s unique about the offering?</u>
 
Model Y is the lowest price per cargo capacity and lowest price per passenger car that Tesla provides.
 
<u>What is the price of the offering?</u>
 
The price of the car in the US is $62,990.
 
<u>From which place(s) is the offering able to be purchased?</u>
 
The main places that the offering is able to be purchased is through the company's website (at [https://www.tesla.com www.tesla.com]) and company's stores.
 
<u>From which place(s) is the offering promoted?</u>
 
The main way that Tesla promotes the offering is through media coverage and word of mouth.
 
====== Automotive leasing ======
Tesla offers leasing and/or loan financing arrangements for its vehicles in certain jurisdictions in North America, Europe and Asia. Under certain programs, the company provides resale value guarantees or buyback guarantees, enabling customers to sell their vehicles back to the company at certain points in time at pre-determined amounts.
 
====== Regulatory credits ======
The company earns tradable credits in the operation of its business under various regulations related to zero-emission vehicles, greenhouse gas, fuel economy and clean fuel. It sells those credits to other regulated entities that can use the credits to comply with emission standards and other regulatory requirements.
 
====== Other current offerings ======
 
'''Service and warranty'''
 
<u>Service</u>
 
Other offerings include the servicing of Tesla vehicles, at company-owned service locations and through Tesla Mobile Service technicians.
 
<u>Extended service plans</u>
 
The company offers extended service plans, which provide coverage beyond the new vehicle limited warranties for certain models in specified regions.
 
'''Financial services'''
 
<u>Purchase financing</u>
 
The company offers loan financing arrangements for its vehicles in certain jurisdictions in North America, Europe and Asia. In certain situations, Tesla provides resale value guarantees or buyback guarantees, enabling customers to sell their vehicles back to the company at certain points in time at pre-determined amounts.
 
<u>Insurance</u>
 
As part of the company's ongoing effort to decrease the total cost of ownership, it offers insurance products on its vehicles. The products are currently available in five US states (Arizona, California, Illinois, Ohio and Texas), and the company plans to offer the products into new geographical markets.


=====Future offerings=====
These offerings are centered around managing closed insurance and pension books, with a focus on long-term value creation for policyholders and investors.


======Automotive sales======
=== What makes the offerings unique? ===
What makes Phoenix Group Holdings' offerings unique is their focus on managing closed-book insurance and pension portfolios, businesses that no longer write new policies but still have significant liabilities. This specialisation is backed by key facts:


'''Cybertruck'''
# '''Specialisation in Closed-Book Management:''' Phoenix Group is one of the largest consolidators of closed life insurance and pension books in the UK, managing over £300 billion in assets. It has acquired major portfolios, including from Standard Life (2018) and ReAssure (2020), demonstrating its leadership in this niche market.
# '''Operational Efficiency:''' Phoenix has a proven track record of improving operational performance. Following the Standard Life acquisition, the company implemented cost-saving measures that led to over £50 million in annual savings. Additionally, its £1 billion cost-saving program announced in 2020 highlights its focus on streamlining operations and improving efficiency across its legacy portfolio.
# '''Capital and Liability Optimisation:''' Phoenix utilises advanced capital management techniques, such as those seen in the £1.1 billion pension scheme buyout from Standard Life, which helped reduce risk and unlock value. The group also manages liabilities efficiently through Solvency II capital management, ensuring long-term sustainability and optimised returns.
# '''Focus on Long-Term Stability:''' Phoenix’s commitment to long-term financial security for policyholders is reflected in its 200% solvency ratio, well above regulatory requirements. The group also reported 9% growth in operating profit in 2023, alongside a consistent dividend track record, underscoring its ability to provide steady returns to shareholders while meeting policyholder obligations.


<u>Target audience</u>
These factors combine to make Phoenix Group’s offerings distinct, focusing on operational efficiencies, capital optimisation, and long-term stability in the management of legacy insurance and pension portfolios.


The target audience is people who are relatively more innovative in their thinking.
=== From which place(s) are the offerings able to be purchased? ===
Phoenix Group's offerings are primarily available to existing policyholders and pension plan participants through their legacy insurance portfolios. Since the company focuses on managing closed books (policies no longer open for new customers), its products are not available for purchase by new clients. Instead, Phoenix manages and services existing life insurance and pension policies that were previously sold by acquired businesses.


<u>What is the offering?</u>
Their offerings are available in the UK, where they have a significant presence, and the company’s services are accessible to policyholders through their digital platforms, customer service teams, and financial advisors. Additionally, Phoenix Group has operations in various European markets through acquired businesses. However, new policy purchases are not part of their current business model.


Cybertruck is a truck, a motor vehicle designed to transport cargo, carry specialised payloads, or perform other utilitarian work.
=== From which place(s) are the offerings promoted? ===
Phoenix Group's offerings are primarily promoted in the UK and Ireland, where it has a strong presence. The company's promotional efforts focus on:


[[File:Cybertruck-Hero-Desktop.jpg|600px]]
# '''Existing Customers:''' Phoenix promotes its services and offerings to current policyholders through direct communications, customer support, and digital channels, emphasising the management of legacy insurance and pension portfolios.
# '''Investor Relations:''' Phoenix also promotes its financial products and services to investors, showcasing its strategy of acquiring and managing closed books, through annual reports, investor presentations, and shareholder updates.
# '''Acquired Businesses:''' The company may also promote its offerings indirectly through the brands of acquired insurers, such as Standard Life and Scottish Widows, which still serve policyholders under the Phoenix Group umbrella.
# '''Digital Platforms:''' Phoenix Group also uses its websites and digital platforms to communicate with both policyholders and investors, promoting its financial management strategies and policyholder services.


<u>What’s unique about the offering?</u>
Overall, promotion is largely directed at existing stakeholders, given the closed-book nature of its business model.


Cybertruck will be the safest vehicle that Tesla provides.
=== What's the current strategy of the company? ===
Phoenix Group's current strategy focuses on sustainable growth, capital optimisation, and maximising the value of legacy insurance and pension portfolios. Key aspects of the strategy include:


<u>What is the price of the offering?</u>
# '''Acquisitions and Consolidation:''' Phoenix continues to grow by acquiring and managing closed-book life insurance and pension portfolios, enhancing its scale and operational efficiency. They focus on integrating acquired businesses, such as Standard Life, and improving their profitability.
# '''Operational Efficiency:''' The group aims to optimise its cost base, improve capital efficiency, and maximise returns from its existing portfolio of life insurance and pension policies. This includes enhancing digital services and improving customer experience for policyholders.
# '''Responsible Capital Management:''' Phoenix focuses on managing its capital efficiently to support growth and provide attractive returns to shareholders. This includes maintaining a strong balance sheet and ensuring adequate liquidity.
# '''Sustainability and Responsible Investment:''' The company is increasingly focused on aligning its operations with sustainable practices, including responsible investing, to meet evolving regulatory requirements and enhance long-term value.
# '''Customer-Centric Approach:''' While not writing new policies, Phoenix aims to deliver strong value for existing policyholders by managing their policies effectively, providing transparent communications, and focusing on delivering on the promises made to them.


The price of the offering is $39,900.
Overall, Phoenix Group's strategy is centered around strengthening its position as a leading consolidator of closed life and pension books, while ensuring long-term growth and value creation for both policyholders and investors.


<u>From which place(s) is the offering able to be purchased?</u>
== Competition ==
Phoenix Group, as a leading life insurance and pension provider primarily focused on managing closed insurance books and pensions in the UK, faces competition from companies with similar business models or overlapping areas in insurance, asset management, and retirement solutions. Key competitors include:


The main places that the offering is likely to be able to be purchased is through the company's website (at [https://www.tesla.com www.tesla.com]) and company's stores.
# '''Legal & General Group (L&G)''': L&G competes with Phoenix in life insurance, pensions, and retirement products. It also has significant expertise in asset management and bulk annuities, making it a major player in managing large pension schemes.
# '''Aviva''': Aviva is another significant UK-based competitor in life insurance and pensions. Aviva provides services in retirement planning, life insurance, and asset management. Its focus on digital transformation and customer engagement is a strategic advantage.
# '''Swiss Re (ReAssure)''': Phoenix acquired ReAssure from Swiss Re in 2020, a move that underscored the competitive landscape in closed life books. Swiss Re remains an indirect competitor, as it focuses on reinsurance and has relationships with other UK life insurers and closed-book specialists.
# '''Standard Life (part of Phoenix)''' and '''Scottish Widows (Lloyds Banking Group)''': Scottish Widows competes in the pensions and life insurance markets. It also provides pension de-risking solutions and bulk annuity products, similar to Phoenix’s focus, especially through Standard Life.
# '''M&G plc''': M&G combines asset management with pension solutions and life insurance products. As an investment manager, it competes with Phoenix in asset management and pension scheme management. Its pension expertise is a key overlap with Phoenix’s retirement-focused services.
# '''Rothesay Life''': Rothesay Life is a specialist insurer focusing on bulk annuities and pension de-risking solutions. It’s a major player in managing pension liabilities, directly competing with Phoenix in acquiring large closed pension books.
Phoenix Group's core strategy centers around closed book acquisitions, bulk annuities, and retirement-focused services, which makes companies specialising in managing long-term pension liabilities and closed books its closest competitors. Additionally, the push toward digital transformation, asset management capabilities, and pension de-risking solutions is common among these firms, placing them in a tight competitive landscape.


<u>From which place(s) is the offering promoted?</u>
== Market ==
To understand Phoenix Group’s market opportunity, let’s look at its '''Total Addressable Market (TAM)''', '''Serviceable Available Market (SAM)''', and '''Serviceable Obtainable Market (SOM)''', specifically in the context of its primary business lines, which include '''closed-book life insurance''', '''open-book insurance''', '''Bulk Purchase Annuities (BPAs)''', and '''retirement solutions'''.


The main way that Tesla is expected to promote the offering is through media coverage and word of mouth.
=== 1. '''Total Addressable Market (TAM)''' ===


'''Tesla Roadster'''
* '''Definition''': The '''TAM''' is the total revenue opportunity available if Phoenix Group could achieve 100% market share in all its target sectors.
* '''Market Size''': The TAM for Phoenix includes:
** The '''global life insurance market''', especially in regions with significant closed-book insurance business (UK, Europe, some parts of North America).
** The '''global pension market''', as companies seek to offload pension liabilities via Bulk Purchase Annuities (BPAs).
** The '''global retirement solutions and wealth management market''', given the increasing demand for retirement products as populations age.
* '''Estimated TAM''': For Phoenix, the TAM is likely in the '''trillions''' in GBP, as the global life insurance market alone is estimated to be worth several trillion dollars annually. However, for closed-book management and pension buyouts specifically, estimates suggest an addressable market in the '''hundreds of billions''', particularly in Europe and North America, where regulatory and aging demographics drive demand.


<u>Target audience</u>
=== 2. '''Serviceable Available Market (SAM)''' ===


The target audience is people who are relatively more innovative in their thinking.
* '''Definition''': The '''SAM''' represents the portion of the TAM that Phoenix Group could realistically service, given its specific focus and operational capabilities.
* '''Market Focus''':
** '''UK and European Closed-Book Life Insurance''': Phoenix Group is one of the largest consolidators of closed-book policies in the UK and Europe. The closed-book market in Europe alone is estimated to hold '''£300 billion to £400 billion''' in assets under management.
** '''Bulk Purchase Annuities (BPA)''': In the UK, the BPA market has seen significant growth, with estimates suggesting it’s worth around '''£30 billion annually'''. As more companies offload pension liabilities, this market is expected to grow.
** '''UK Retirement and Wealth Solutions''': Given its acquisition of Standard Life and expansion into the open-book market, Phoenix can also tap into the retirement solutions market, worth an estimated '''£1 trillion''' in the UK alone.
* '''Estimated SAM''': For Phoenix, the SAM is likely in the '''hundreds of billions of pounds''', focusing primarily on the UK and European closed-book life insurance market, BPAs, and retirement solutions.


<u>What is the offering?</u>
=== 3. '''Serviceable Obtainable Market (SOM)''' ===


The Tesla Roadster is a car, a wheeled motor vehicle used for transportation.
* '''Definition''': The '''SOM''' is the portion of the SAM that Phoenix Group can realistically capture, given competition, regulatory constraints, and its existing market share.
 
* '''Competitive Position''':
[[File:Tesla-roadster.jpg|600px]]
** '''Closed-Book Consolidation''': Phoenix already holds a significant market share in the UK closed-book insurance market. Its scale, expertise, and established relationships position it to capture a substantial portion of this market. Realistically, Phoenix could maintain a '''10-20% share''' of the UK and European closed-book market, equating to '''£30-60 billion'''.
 
** '''BPAs''': Phoenix is actively growing its presence in the BPA market. Given competition from other insurers like Legal & General, Phoenix might capture '''5-10% of the BPA market''', which could mean around '''£1.5-3 billion annually'''.
<u>What’s unique about the offering?</u>
** '''Retirement and Wealth Solutions''': This is a competitive market with players like Aviva, Prudential, and Standard Life. Phoenix’s SOM here could be around '''5%''', or '''£50 billion''', within the UK retirement solutions market.
 
* '''Estimated SOM''': Combining these factors, Phoenix’s SOM might realistically be between '''£80 billion to £120 billion''' across its primary markets. This includes substantial market share in closed-book management, a growing foothold in BPAs, and a smaller but strategic presence in retirement solutions.
Roadster will be the fastest accelerating and longest ranging car that Tesla provides.
 
<u>What is the price of the offering?</u>
 
The price of the offering is around $200,000.
 
<u>From which place(s) is the offering able to be purchased?</u>
 
The main places that the offering is likely to be able to be purchased is through the company's website (at [https://www.tesla.com www.tesla.com]) and company's stores.
 
<u>From which place(s) is the offering promoted?</u>
 
The main way that Tesla is expected to promote the offering is through media coverage and word of mouth.
 
'''Tesla Semi'''
 
<u>Target audience</u>
 
The target audience is people who are relatively more innovative in their thinking.
 
<u>What is the offering?</u>
 
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.
 
[[File:Tesla-semi.jpg|600px]]
 
<u>What’s unique about the offering?</u>
 
What makes the vehicle unique is that it will be the largest cargo capacity vehicle that Tesla provides.
 
<u>What is the price of the offering?</u>
 
The price of the offering is around $150,000.
 
<u>From which place(s) is the offering able to be purchased?</u>
 
The main places that the offering is likely to be able to be purchased is through the company's website (at [https://www.tesla.com www.tesla.com]) and company's stores.
 
<u>From which place(s) is the offering promoted?</u>
 
The main way that Tesla is expected to promote the offering is through media coverage and word of mouth.
 
======Ride-hailing service======
<u>Target audience</u>
 
The target audience is people who are relatively more innovative in their thinking.
 
<u>What is the offering?</u>
 
Tesla has said that it intends to establish an autonomous Tesla ride-hailing network, enabling people to hail a ride.
 
<u>What’s unique about the offering?</u>
 
What's unique about the ride-hailing service is that it's expected to be faster and cheaper than the alternatives.
 
<u>What is the price of the offering?</u>
 
Information about the expected price of the service has yet to be disclosed.
 
<u>From which place(s) is the offering able to be purchased?</u>
 
Stockhub expects the offering to be purchased via a Tesla ride-hailing app, which Stockhub expects will be downloable from both the App Store and Google Play,
 
<u>From which place(s) is the offering promoted?</u>
 
The main way that Tesla is expected to promote the offering is through media coverage and word of mouth.
====Energy generation and storage ====
 
The energy generation and storage segment includes the design, manufacture, installation, sales and leasing of solar energy generation and energy storage products and related services and sales of solar energy systems incentives.
 
=====Current offerings =====
 
======Energy generation and storage sales======
 
'''Powerwall'''
 
<u>Target audience</u>
 
The target audience is people who are relatively more innovative in their thinking.
 
<u>What is the offering?</u>
 
Powerwall is a energy storage system (i.e. a type of battery).
 
[[File:Powerwall2.jpg|600px]]
 
<u>What’s unique about the offering?</u>
 
Powerwall is the lowest priced energy storage system that Tesla provides.
 
{| class="wikitable"
|+Competition comparison
|-
! !!Powerwall!!'''Megapack'''
|-
|Is the source of energy solar?||style="background: green; color: white;" |Yes||style="background: green; color: white;" |Yes
|-
|Is it designed for houses (i.e. smaller electricity demand)?||style="background: green; color: white;" |Yes||style="background: red; color: white;" |No
|-
|Is it designed for commercial buildings (i.e. greater electricity demand)?||style="background: red; color: white;" |No|| style="background: green; color: white;" |Yes
|}
 
<u>What is the price of the offering?</u>
 
A single Powerwall sells for $10,500.
 
<u>From which place(s) is the offering able to be purchased?</u>
 
In the US, the main places that the offering is able to be purchased is through the company's website (at [https://www.tesla.com www.tesla.com]), stores and galleries, as well as through its network of channel partners, such as public utility companies. Outside of the US, the product is able to be purchased via its international sales organisation and a network of channel partners.
 
<u>From which place(s) is the offering promoted?</u>
 
The main way that Tesla is expected to promote the offering is through media coverage and word of mouth.
 
'''Megapack'''
 
<u>Target audience</u>
 
The target audience is people who are relatively more innovative in their thinking.
 
<u>What is the offering?</u>
 
Megapack is an energy storage system.
 
[[File:Megapack-CleanerGrid-D.jpg|600px]]
 
<u>What’s unique about the offering?</u>
 
Megapack is the largest energy storage system that Tesla provides.
 
<u>What is the price of the offering?</u>
 
A single Megapack sells for $1,000,000.
 
<u>From which place(s) is the offering able to be purchased?</u>
 
In the US, the main places that the offering is able to be purchased is through the company's website (at [https://www.tesla.com www.tesla.com]), stores and galleries, as well as through its network of channel partners. Outside of the US, the product is able to be purchased via its international sales organisation and a network of channel partners.
 
<u>From which place(s) is the offering promoted?</u>
 
The main way that Tesla is expected to promote the offering is through media coverage and word of mouth.
 
'''Solar Roof'''
 
<u>Target audience</u>
 
The target audience of the offering is people who are relatively more innovative in their thinking.
 
<u>What is the offering?</u>
 
Solar Roof is a roof tile.
 
[[File:5c603e0d86d2c7c005d1df44a jVVOsV8.jpg|600px]]
 
<u>What’s unique about the offering?</u>
 
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.


=== Summary of TAM, SAM, and SOM for Phoenix Group: ===
{| class="wikitable"
{| class="wikitable"
|+Competition comparison
!Metric
!Market Size
!Key Focus Areas
|-
|-
! !!Solar Roof!!Traditional roof tile
|'''TAM''' (Total Addressable Market)
!Other solar-energy generation roof tile
|'''£1+ trillion'''
|Global life insurance, pensions, retirement solutions
|-
|-
|Does it generate electricity?|| style="background: green; color: white;" |Yes|| style="background: red; color: white;" |No
|'''SAM''' (Serviceable Available Market)
| style="background: green; color: white;" |Yes
|'''£200-400 billion'''
|UK and European closed-book, BPAs, UK retirement solutions
|-
|-
|Is it aesthetically beautiful?|| style="background: green; color: white;" |Yes|| style="background: green; color: white;" |Yes
|'''SOM''' (Serviceable Obtainable Market)
| style="background: red; color: white;" |No
|'''£80-120 billion'''
|UK and European closed-book, BPAs, retirement solutions in the UK
|}
|}
Phoenix’s strengths in '''closed-book consolidation''', its expanding '''BPA business''', and '''retirement solutions''' provide it with a substantial and accessible market within the broader insurance and retirement sector. This focus allows it to capitalise on '''predictable cash flows''' from closed books and emerging opportunities in BPAs, while building a foothold in the growing retirement market.


<u>What is the price of the offering?</u>
== Team ==
 
As of 2024, the key members of the leadership team at Phoenix Group Holdings include:
There is no information on the  price of the offering within the public domain.
 
<u>From which place(s) is the offering able to be purchased?</u>
 
In the US, the main places that the offering is able to be purchased is through the company's website (at [https://www.tesla.com www.tesla.com]), stores and galleries, as well as through its network of channel partners. Outside of the US, the product is able to be purchased via its international sales organisation and a network of channel partners.
 
<u>From which place(s) is the offering promoted?</u>
 
The main way that Tesla is expected to promote the offering is through media coverage and word of mouth.
 
====== Other current offerings ======
'''Service and Warranty'''
 
Other offerings include servicing and repairs, and extended limited warranties in certain regions.
 
'''Financial services'''
 
Tesla offers certain loan and power purchase agreement (PPA) options to residential or commercial customers who pair energy storage systems with solar energy systems. The company offers certain financing options to its solar customers, which enable the customer to purchase and own a solar energy system, Solar Roof or integrated solar and Powerwall system. Its solar PPAs, offered to commercial customers, charges a fee per kilowatt-hour based on the amount of electricity produced by its solar energy systems.
 
Note: a PPA is a contract between two parties, one which generates electricity (the seller) and one which is looking to purchase electricity (the buyer). The agreement defines all of the commercial terms for the sale of electricity between the two parties, including when the project will begin commercial operation, schedule for delivery of electricity, penalties for under delivery, payment terms, and termination.
 
== Market==
 
===Total Addressable Market ===
 
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===
 
Here, the serviceable available market (SAM) is defined as the global car 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 $1.0 trillion.
 
===Serviceable Obtainable Market===
 
Here, the serviceable obtainable market (SOM) is defined as the US car 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 $262 billion.
 
== Competition==
 
===Automotive===
 
Tesla believes that its vehicles compete in the market both based on their traditional segment classification as well as based on their propulsion technology. For example, Model S and Model X compete primarily with premium sedans and premium SUVs, and Model 3 and Model Y compete with small to medium-sized sedans and compact SUVs, which are extremely competitive markets. Competing products typically include internal combustion vehicles from more established automobile manufacturers; however, many established and new automobile manufacturers have entered or have announced plans to enter the market for electric and other alternative fuel vehicles. Overall, Tesla believes these announcements and vehicle introductions, including the introduction of electric vehicles into rental car company fleets, promote the development of the electric vehicle market by highlighting the attractiveness of electric vehicles relative to the internal combustion vehicle. Many major automobile manufacturers have electric vehicles available today in major markets including the US, China and Europe, and other current and prospective automobile manufacturers are also developing electric vehicles. In addition, several manufacturers offer hybrid vehicles, including plug-in versions.
 
Tesla also believes that there is increasing competition for its vehicle offerings as a platform for delivering self-driving technologies, charging offerings and other features and services, and it expects to compete in this developing market through continued progress on its autopilot, full self-driving and neural network capabilities, Supercharger network and its infotainment offerings.
 
===Energy generation and storage===
 
====Energy Storage Systems====
 
The market for energy storage products is also highly competitive, and both established and emerging companies have introduced products that are similar to Tesla's product portfolio or that are alternatives to the elements of its systems. Tesla competes with these companies based on price, energy density and efficiency. Tesla believes that the things that give it a competitive advantage in its markets are: the specifications and features of its products, its strong brand and the modular, scalable nature of its energy storage products.


====Solar Energy Systems====
'''Andy Briggs – Group Chief Executive Officer'''


The primary competitors to its solar energy business are the traditional local utility companies that supply energy to Tesla's potential customers. Tesla competes with these traditional utility companies primarily based on price and the ease by which customers can switch to electricity generated by Tesla's solar energy systems. Tesla also competes with solar energy companies that provide products and services similar to it. Many solar energy companies only install solar energy systems, while others only provide financing for these installations. Tesla believes it has a significant expansion opportunity with its offerings and that the regulatory environment is increasingly conducive to the adoption of renewable energy systems.
Andy Briggs has been the CEO of Phoenix Group since 2015 and leads the company's strategic direction, focusing on growth through acquisitions and operational efficiency.


==Team ==
'''Clare Bousfield – Group Chief Financial Officer'''


===Leadership===
Clare Bousfield oversees financial strategy, capital management, and reporting, ensuring the group's financial health and sustainable growth.


====Chief Executive Officer====
'''Keith Skeoch – Chairman'''


[[File:Elon Musk Royal Society (crop2).jpg|200px]]
Keith Skeoch is the Chairman of Phoenix Group and has significant experience in financial services. He provides leadership and governance to the board.


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.
'''Ian McKenna – Chief Risk Officer'''


====Chief Financial Officer====
Ian McKenna is responsible for overseeing risk management at Phoenix Group, ensuring that operational, financial, and regulatory risks are effectively managed.


[[File:Zachary Kirkhorn.jpg|200px]]
'''Paul Brewer – Chief Operating Officer'''


Zachary Kirkhorn is Chief Financial Officer of Tesla and served the position since March 2019. Previously, Zach served in various finance positions continuously since joining Tesla in March 2010, other than between August 2011 and June 2013 during which he attended business school, including most recently as Vice President, Finance, Financial Planning and Business Operations from December 2018 to March 2019. Zach holds dual B.S.E. degrees in economics and mechanical engineering and applied mechanics from the University of Pennsylvania and an M.B.A. from Harvard University.
Paul Brewer manages the operational aspects of Phoenix Group, including business integration from acquisitions and optimising customer service.


====Senior Vice President====
The leadership team is supported by various senior managers responsible for specific business areas such as investments, legal and compliance, and technology.


[[File:Drew.jpg|200px]]
== Risks ==
As with any investment, investing in Phoenix Group Holdings carries a level of risk. Overall, based on the Phoenix Group Holdings' adjusted beta (i.e. 0.76), the degree of risk associated with an investment in Phoenix Group Holdings is 'medium'.


Andrew Baglino has served as Tesla's Senior Vice President, Powertrain and Energy Engineering since October 2019. Previously, Drew served in various engineering positions continuously since joining Tesla in March 2006. Drew holds a B.S. in electrical engineering from Stanford University.
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 'medium' risk, it must have a beta value of  between 0.50 and 1.00. Further information about the beta ratings can be found in the appendix section of this report.


===Board of Directors===
The key risks can be found below. For us, currently, the biggest risk to the valuation of the company relates to interest rate volatility (i.e. interest rate risk).


'''Elon Musk'''
=== 1. '''Regulatory and Legislative Risks''' ===


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.
* '''Solvency II and Capital Requirements''': As an insurer, Phoenix is subject to '''Solvency II''' regulations, which require insurers to hold a certain level of capital relative to their liabilities. Changes in these regulations or an increase in capital requirements could force Phoenix to retain more capital, reducing its flexibility and potentially impacting dividend payments.
* '''Pension and Insurance Regulation Changes''': Since Phoenix operates heavily in the '''pensions''' and '''retirement solutions''' sectors, any adverse changes in pension or tax legislation could impact demand for its products, profitability, and its Bulk Purchase Annuities (BPA) business.
* '''Climate and ESG Regulation''': Increasingly strict Environmental, Social, and Governance (ESG) requirements are pushing insurers to adjust investment portfolios to meet regulatory guidelines. Phoenix might need to divest from certain assets, which could reduce investment returns.


'''Robyn M. Denholm'''
=== 2. '''Interest Rate and Investment Yield Risks''' ===


[[File:894px-2018-05-16-cebit-robyn-m-denholm-portrait.jpg|200px]]
* '''Low Yield Environment''': A substantial portion of Phoenix's revenues comes from the investment returns on its policyholder funds. In a low-interest-rate environment, the company may struggle to generate adequate returns on its investment portfolio, which can impact profitability and dividend payouts.
* '''Rising Interest Rates''': While rising interest rates might benefit Phoenix’s investment returns, they also increase discount rates, which can reduce the value of Phoenix's long-term liabilities, including its bulk purchase annuity (BPA) business. Higher rates can also reduce the value of the bond-heavy portfolios often held by insurers.
* '''Market Volatility''': A significant portion of Phoenix's assets is invested in '''fixed-income securities'''. Market volatility can cause fluctuations in the value of these investments, impacting the solvency position, especially if there’s a sudden downturn.


Robyn M. Denholm has served as a director since August 2014 and as Chair since November 2018. Since January 2021, Ms. Denholm has been an operating partner of Blackbird Ventures, a venture capital firm. From January 2017 through June 2019, Ms. Denholm was with Telstra Corporation Limited, a telecommunications company, as Chief Financial Officer and Head of Strategy from October 2018 through June 2019, and Chief Operations Officer from January 2017 to October 2018. Prior to Telstra, from August 2007 to February 2016, Ms. Denholm was with Juniper Networks, Inc., a manufacturer of networking equipment (“Juniper”), serving first as its Executive Vice President and Chief Financial Officer and then as its Executive Vice President and Chief Financial and Operations Officer. Prior to joining Juniper, Ms. Denholm served in various executive roles at Sun Microsystems, Inc. from January 1996 to August 2007. Ms. Denholm also served at Toyota Motor Corporation Australia for seven years and at Arthur Andersen & Company for five years in various finance assignments. Ms. Denholm is a Fellow of the Institute of Chartered Accountants of Australia/New Zealand, a member of the Australian Institute of Company Directors, and holds a Bachelor’s degree in Economics from the University of Sydney and a Master’s degree in Commerce and a Doctor of Business Administration (honoris causa) from the University of New South Wales.
=== 3. '''Longevity and Mortality Risk''' ===


'''Ira Ehrenpreis'''
* '''Longevity Risk''': Phoenix bears longevity risk, as it is responsible for paying benefits as long as policyholders live. Longer life expectancies increase the liabilities on Phoenix’s books, potentially eroding profitability, particularly for its annuity and pension businesses.
* '''Mortality Risk''': Unforeseen mortality events (e.g., pandemics) could lead to higher-than-expected claims, increasing Phoenix's short-term liabilities and impacting its solvency position.


[[File:1516155738122.jpg|200px]]
=== 4. '''Competition and Market Dynamics''' ===


Ira Ehrenpreis is Founder and Managing Partner of DBL Partners, a leading impact investing venture capital firm, currently managing more than $1 billion of capital. DBL invests in companies that can deliver top-tier financial returns, while simultaneously driving social or environmental change.
* '''Intense Competition''': Phoenix faces competition from other insurers, especially in the bulk purchase annuity (BPA) market, where players like '''Legal & General''' and '''Aviva''' have strong market positions. Competition could impact Phoenix’s ability to acquire new business profitably.
* '''New Market Entrants''': As Phoenix expands into open-book insurance and retirement solutions, it faces competition from established life insurers and pension providers, which may make it difficult to gain significant market share in these areas.


Ira is a recognized leader in the venture capital industry, having served on the Board, Executive Committee, and as Annual Meeting Chairman of the National Venture Capital Association (NVCA). He currently serves as the President of the Western Association of Venture Capitalists (WAVC) and as the Chairman of the VCNetwork, the largest and most active California venture capital organization.
=== 5. '''Acquisition Integration and Execution Risks''' ===


Ira was awarded the 2018 NACD Directorship 100 for being “one of the most influential leaders in the boardroom and corporate governance community.” In 2007, he was named one of the “Top 50 Most Influential Men Under 45" and in 2014 was inducted into the International Green Industry Hall of Fame.
* '''Dependence on Acquisitions''': Phoenix's growth strategy is heavily reliant on acquiring closed-book life insurance portfolios and expanding into BPAs. However, integrating these acquisitions can be complex and costly. Any difficulties in integrating new acquisitions could affect Phoenix’s operational efficiency and financial performance.
* '''Integration Challenges''': Acquisitions bring challenges, from technology integration to operational alignment. Phoenix’s success in generating returns relies on its ability to integrate and manage these new books effectively, which is not always guaranteed.


Ira has served for several years as the Chairman of the Silicon Valley Technology Innovation & Entrepreneurship Forum (SVIEF). He is the Founder and Chairman of one of the most prominent annual energy innovation industry events, the World Energy Innovation Forum (WEIF), which has convened the who's-who in the industry to discuss the important energy issues and opportunities of our time. In addition, Ira has served on several industry Boards, including the Department of Energy’s (DOE) Energy Efficiency and Renewable Energy Advisory Committee (ERAC), the National Renewable Energy Laboratory (NREL) Advisory Council, the Clean-Tech Investor Summit (Chairman), the Renewable Energy Finance Forum (REFF) West (Co-Chairman), the Renewable Energy Finance Forum (REFF) Wall Street (Co-Chairman), the Cleantech Venture Network (Past Chairman of Advisory Board), and ACORE (American Council on Renewable Energy).
=== 6. '''Liquidity and Refinancing Risks''' ===


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).
* '''Debt Levels and Refinancing''': Phoenix Group uses debt financing to fund some of its acquisitions. If the cost of debt rises (e.g., due to increasing interest rates or a change in credit rating), it could increase financing costs and reduce cash available for dividends and expansion.
* '''Liquidity Constraints''': In a market downturn, Phoenix may need to access capital markets to fund operations or meet capital requirements. Limited access to liquidity or higher-than-expected costs could negatively impact Phoenix’s stability.


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.
=== 7. '''Reputation and Brand Risk''' ===


'''Larry Ellison'''
* '''Customer Trust and Brand Value''': Phoenix relies on a strong brand, especially in retirement and pension solutions. Negative publicity or poor customer experience, especially following an acquisition, could erode brand trust and hinder its growth efforts.
* '''ESG and Social Responsibility''': As public and investor scrutiny of ESG practices grows, any misalignment or failure to meet ESG standards could damage Phoenix’s reputation and investor appeal.


[[File:1029px-Larry Ellison picture.png|200px]]
=== 8. '''Operational and Technological Risks''' ===


Lawrence J. Ellison has been a member of the Board since December 2018. Mr. Ellison is the founder of Oracle Corporation, a software and technology company, has served as its Chief Technical Officer since September 2014 and previously served as its Chief Executive Officer from June 1977 to September 2014. Mr. Ellison has also served on Oracle’s board of directors since June 1977, including as its Chairman since September 2014 and previously from May 1995 to January 2004.
* '''Cybersecurity''': Phoenix holds vast amounts of sensitive policyholder information. Any breach could lead to financial losses, reputational damage, and regulatory scrutiny.
* '''Legacy System Management''': With Phoenix’s expansion through acquisitions, the company must integrate various IT and data systems effectively. Operational disruptions, system failures, or integration issues could impact service levels and increase operational costs.


'''Hiro Mizuno'''
== Valuation ==


[[File:9H 8h7tW40QNtdH1Y ZsVOj-lnmRMD4R2MAuxy1ajM.jpg|200px]]
=== Dividend Discount Model ===
To calculate the value of '''Phoenix Group''' using the '''Dividend Discount Model (DDM)''', we need to follow the basic formula for a '''Constant Growth Dividend Discount Model''':


Hiromichi Mizuno has been a member of Board since April 2020. Since January 2021, Mr. Mizuno has served as the United Nations Special Envoy on Innovative Finance and Sustainable Investments. From January 2015 to March 2020, Mr. Mizuno served as Executive Managing Director and Chief Investment Officer of Japan’s Government Pension Investment Fund, the largest pension fund in the world. Previously, Mr. Mizuno was a partner at Coller Capital, a private equity firm, from 2003. In addition to being a career-long finance and investment professional, Mr. Mizuno has served as a board member of numerous business, government and other organizations, currently including the Mission Committee of Danone S.A., a global food products company, and the World Economic Forum’s Global Future Council. Mr. Mizuno is also involved in academia, having been named to leadership or advisory roles at Harvard University, Oxford University, University of Cambridge, Northwestern University and Osaka University. Mr. Mizuno holds a B.A. in Law from Osaka City University and an M.B.A. from the Kellogg Graduate School of Management at Northwestern University.
Value of the Stock (V)=r−gD1​​


'''James Murdoch'''
Where:


[[File:James Murdoch 2008- NRKbeta.jpg|200px]]
* D1​ = the expected dividend in the next period (i.e., the next year).
* r = the required rate of return or cost of equity.
* g = the expected growth rate of dividends.


James Murdoch has been a member of the Board since July 2017. Since March 2019, Mr. Murdoch has been the Chief Executive Officer of Lupa Systems, a private investment company that he founded. Previously, Mr. Murdoch held a number of leadership roles at Twenty-First Century Fox, Inc. (“21CF”), a media company, over two decades, including its Chief Executive Officer from 2015 to March 2019, its Co-Chief Operating Officer from 2014 to 2015, its Deputy Chief Operating Officer and Chairman and Chief Executive Officer, International from 2011 to 2014 and its Chairman and Chief Executive, Europe and Asia from 2007 to 2011. Previously, he served as the Chief Executive Officer of Sky plc from 2003 to 2007, and as the Chairman and Chief Executive Officer of STAR Group Limited, a subsidiary of 21CF, from 2000 to 2003. Mr. Murdoch also formerly served on the boards of News Corporation from 2013 to July 2020, of 21CF from 2017 to 2019, of Sky plc from 2016 to 2018, of GlaxoSmithKline plc from 2009 to 2012 and of Sotheby’s from 2010 to 2012.
=== Step-by-Step Calculation ===


'''Kimbal Musk'''
# '''Find Expected Dividend (D1​)'''
#* Let’s assume Phoenix’s expected dividend in the next period is '''£0.30 per share''' (this is an assumption, so you should replace it with actual forecast data if available).
# '''Cost of Equity (r)'''
#* From earlier, we estimated Phoenix's '''cost of equity''' (using CAPM) to be around '''8.9%'''.
# '''Dividend Growth Rate (g)'''
#* Phoenix’s dividends have been relatively stable, with moderate growth. Let’s assume an expected dividend growth rate of '''2%''' per year.


[[File:771px-KIMBAL MUSK OFFICIAL HEADSHOT.jpg|200px]]
=== Putting it into the formula: ===
V=0.089−0.020.30​=0.0690.30​ V≈4.35


Kimbal Musk is Co-Founder of The Kitchen, a growing family of businesses that pursues an America where everyone has access to real food. Kimbal is a 2017 Social Entrepreneur by the Schwab Foundation, a sister organization to the World Economic Forum, for his impactful, scalable work to bring Real Food to Everyone.
=== Interpretation: ===
The value of Phoenix Group based on the '''DDM''' is approximately '''£4.35 per share''', assuming the expected dividend for the next year is £0.30, the cost of equity is 8.9%, and the growth rate of dividends is 2%.


His family of restaurant concepts serve real food at every price point. They source food from American farmers, stimulating the local farm economy to the tune of millions of dollars a year. His non-profit organization builds permanent, outdoor Learning Garden classrooms in underserved schools around the U.S. reaching over 125,000 students everyday. His urban, indoor vertical farming accelerator, seeks to empower thousands of young entrepreneurs to become real food farmers.
=== Important Considerations: ===


Kimbal is on the board for Chipotle, Tesla, and SpaceX.
* The accuracy of this model is highly dependent on the accuracy of the '''dividend forecast''', '''cost of equity''', and '''growth rate'''. Any changes to these assumptions would significantly affect the outcome.
* This model is most suitable for companies with '''stable and predictable dividend policies''', such as Phoenix Group, but it may not fully capture other aspects of value, such as potential capital gains or market changes.


'''Kathleen Wilson-Thompson'''
== Appendix ==
 
[[File:Kathleen-Wilson-Thompson-Most-Influential-HR-Leader.jpg|200px]]
 
Kathleen Wilson-Thompson has been a member of the Board since December 2018. Ms. Wilson-Thompson previously served as Executive Vice President and Global Chief Human Resources Officer of Walgreens Boots Alliance, Inc., a global pharmacy and wellbeing company, from December 2014 to January 2021, and as Senior Vice President and Chief Human Resources Officer from January 2010 to December 2014. Prior to Walgreens, Ms. Wilson-Thompson held various legal and operational roles at The Kellogg Company, a food manufacturing company, from July 2005 to December 2009, including most recently as its Senior Vice President, Global Human Resources. Ms. Wilson-Thompson also serves on the boards of directors of Wolverine World Wide, Inc. Ms. Wilson-Thompson holds an A.B. in English Literature from the University of Michigan and a J.D. and L.L.M. (Corporate and Finance Law) from Wayne State University.
 
==Financials==
 
===What are the financial forecasts?===
In keeping in-line with industry standards, the number of years of financial forecasts shown below is five years.
 
====Income statement====


=== Dividend ===
{| class="wikitable"
{| class="wikitable"
|+Income statement<ref>Source: Stockhub Limited</ref><ref group="Note" name="Note04" />
|+Dividends
!
!Interim
!Final
!Total
!Change (%)
|-
|-
!Year/Item !!Year 1 !!Year 2!!Year 3!!Year 4!!Year 5
|2024
|0.2665
|
|0.2665
|
|-
|-
|Year end date||31/12/2022||31/12/2023||31/12/2024||31/12/2025 ||31/12/2026
|2023
|0.2600
|0.2665
|0.5265
|4%
|-
|-
|Revenues ($million)|| $78,935||$112,257||$154,816||$207,049||$268,527
|2022
|0.2480
|0.2600
|0.5080
|4%
|-
|-
|Gross profits ($million)||$23,680||$33,677||$46,445||$62,115||$80,558
|2021
|-
|0.2410
|Operating profits ($million)||$11,840||$16,839||$23,222||$31,057||$40,279
|0.2480
|-
|0.4890
|Net profits ($million)||$9,354||$13,302||$18,346||$24,535|| $31,820
|}
 
==== Balance sheet====
 
====Cash flow statement====
 
===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 billion.
|-
|What's the estimated terminal annual growth rate of the total addressable market?
|3%
|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?
|2020
|10%
|0.2340
|Stockhub estimates that the peak market share of Tesla is around 10%, and, therefore, suggests using the share amount here.
|0.2410
|0.4750
|1%
|-
|-
|Which distribution function do you want to use to estimate company revenue?
|2019
|Gaussian
|0.2340
|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.
|0.2340
|0.4680
|2%
|-
|-
|What is the estimated company lifespan?
|2018
|60 years
|0.2260
| 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>
|0.2340
|0.4600
| -8%
|-
|-
|What's the estimated standard deviation of company revenue?
|2017
| 6 years
|0.2510
|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.
|0.2510
|0.5020
| -1%
|-
|-
| colspan="3" |'''<div style="text-align: center;">Growth stages</div>'''
|2016
|0.2670
|0.2390
|0.5060
| -5%
|-
|-
|How many main stages of growth is the company expected to go through?
|2015
| 4 stages
|0.2670
|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>
|0.2670
 
|0.5340
 
|0%
 
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?
|2014
|30%
|0.2670
|Research suggests 30%.<ref name=":6">http://escml.umd.edu/Papers/ObsCPMT.pdf</ref>
|0.2670
|0.5340
|0%
|-
|-
|What proportion of the company lifecycle is represented by growth stage 2?
|2013
|10%
|0.2670
|Research suggests 10%.<ref name=":6" />
|0.2670
|0.5340
|12%
|-
|-
| What proportion of the company lifecycle is represented by growth stage 3?
|2012
|20%
|0.2100
| Research suggests 20%.<ref name=":6" />
|0.2670
|0.4770
|14%
|-
|-
|What proportion of the company lifecycle is represented by growth stage 4?
|2011
|40%
|0.2100
|Research suggests 40%.<ref name=":6" />
|0.2100
|0.4200
|0%
|-
|-
| colspan="3" |'''<div style="text-align: center;">Growth stage 2</div>'''
|2010
|0.2100
|0.2100
|0.4200
|
|-
|-
|Cost of goods sold as a proportion of revenue (%)
|2009
|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%.
|0.1527
|0.1527
|
|}
{| class="wikitable"
|+Dividend
!
!Mean
!Median
!Mode
|-
|-
|Operating expenses as a proportion of revenue (%)
|Since inception
|15%
|2%
|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%.
|1%
|0%
|-
|-
|Tax rate (%)
|Since the last five years
|21%
|3%
|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%.
|3%
|-
|#N/A
|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 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)
|Since the last three years
|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 (%)
|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 3)<ref name=":7" />, and the margin for its peers is 55%.
|-
|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 3)<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 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 (%)
|3%
|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 3)<ref name=":7" />, and the amount for its peers is 3%.
|4%
|-
|#N/A
|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 4)<ref name=":7" />, and the amount for its peers is 10%.
|-
|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 4</div>'''
|-
|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 4)<ref name=":7" />, and the margin for its peers is 55%.
|-
|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 4)<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 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%.
|-
|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 3%.
|-
|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 4)<ref name=":7" />, and the amount for its peers is 10%.
|-
|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.
|}
|}


==Risks==
===Economic links to cash flow patterns ===
 
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===
 
*Tesla may be impacted by macroeconomic conditions resulting from the global COVID-19 pandemic.
*Tesla may experience delays in launching and ramping the production of its products and features, or Tesla may be unable to control its manufacturing costs.
*Tesla may be unable to grow its global product sales, delivery and installation capabilities and its servicing and vehicle charging networks, or Tesla may be unable to accurately project and effectively manage its growth.
*Tesla's future growth and success is dependent upon consumers’ demand for electric vehicles and specifically its vehicles in an automotive industry that is generally competitive, cyclical and volatile.
*Tesla's suppliers may fail to deliver components according to schedules, prices, quality and volumes that are acceptable to us, or Tesla may be unable to manage these components effectively.
*Tesla may be unable to meet its projected construction timelines, costs and production ramps at new factories, or Tesla may experience difficulties in generating and maintaining demand for products manufactured there.
* Tesla will need to maintain and significantly grow its access to battery cells, including through the development and manufacture of its own cells, and control its related costs.
*Tesla faces strong competition for its products and services from a growing list of established and new competitors.
 
===Risks related to the company's operations===
 
*Tesla may experience issues with lithium-ion cells or other components manufactured at Gigafactory Nevada and Gigafactory Shanghai, which may harm the production and profitability of its vehicle and energy storage products.
*Tesla faces risks associated with maintaining and expanding its international operations, including unfavourable and uncertain regulatory, political, economic, tax and labour conditions.
*Tesla's business may suffer if its products or features contain defects, fail to perform as expected or take longer than expected to become fully functional.
*Tesla may be required to defend or insure against product liability claims.
*Tesla will need to maintain public credibility and confidence in its long-term business prospects in order to succeed.
*Tesla may be unable to effectively grow, or manage the compliance, residual value, financing and credit risks related to, its various financing programs.
*Tesla must manage ongoing obligations under its agreement with the Research Foundation for the State University of New York relating to its Gigafactory New York.
*If Tesla is unable to attract, hire and retain key employees and qualified personnel, its ability to compete may be harmed.
*Tesla is highly dependent on the services of Elon Musk, its Chief Executive Officer.
*Tesla's information technology systems or data, or those of its service providers or customers or users could be subject to cyber-attacks or other security incidents, which could result in data breaches, intellectual property theft, claims, litigation, regulatory investigations, significant liability, reputational damage and other adverse consequences.
*Any unauthorized control or manipulation of Tesla's products’ systems could result in loss of confidence in it and its products.
*Tesla's business may be adversely affected by any disruptions caused by union activities.
*Tesla may choose to or be compelled to undertake product recalls or take other similar actions.
*Tesla's current and future warranty reserves may be insufficient to cover future warranty claims.
*Tesla's insurance coverage strategy may not be adequate to protect it from all business risks.
*Tesla's debt agreements contain covenant restrictions that may limit its ability to operate its business.
*Additional funds may not be available to Tesla when it needs or want them.
*Tesla may be negatively impacted by any early obsolescence of its manufacturing equipment.
*Tesla holds and may acquire digital assets that may be subject to volatile market prices, impairment and unique risks of loss.
*There is no guarantee that Tesla will have sufficient cash flow from its business to pay its indebtedness or that it will not incur additional indebtedness.
*Tesla is exposed to fluctuations in currency exchange rates.
*Tesla may need to defend itself against intellectual property infringement claims, which may be time-consuming and expensive.
*Increased scrutiny and changing expectations from stakeholders with respect to the company's ESG practices may result in additional costs or risks.
* Tesla's operations could be adversely affected by events outside of its control, such as natural disasters, wars or health epidemics.
 
===Risks related to government laws and regulations=== 
 
* Demand for Tesla's products and services may be impacted by the status of government and economic incentives supporting the development and adoption of such products.
*Tesla is subject to evolving laws and regulations that could impose substantial costs, legal prohibitions or unfavourable changes upon its operations or products.
*Any failure by Tesla to comply with a variety of United States and international privacy and consumer protection laws may harm the company.
*Tesla could be subject to liability, penalties and other restrictive sanctions and adverse consequences arising out of certain governmental investigations and proceedings.
*Tesla may face regulatory challenges to or limitations on its ability to sell vehicles directly.
 
===Risks related to the ownership of the company's common stock=== 
 
*The trading price of Tesla's common stock is likely to continue to be volatile.
* Tesla's financial results may vary significantly from period to period due to fluctuations in its operating costs and other factors.
*Tesla may fail to meet its publicly announced guidance or other expectations about its business, which could cause its stock price to decline.
*Transactions relating to Tesla's convertible senior notes may dilute the ownership interest of existing stockholders, or may otherwise depress the price of its common stock.
*If Elon Musk were forced to sell shares of Tesla's common stock that he has pledged to secure certain personal loan obligations, such sales could cause its stock price to decline.
* Anti-takeover provisions contained in Tesla's governing documents, applicable laws and its convertible senior notes could impair a takeover attempt.
 
==Valuation==
 
===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 72%), then an investment in the company is considered to be a 'suitable' one.
 
===What are the assumptions used to estimate the return?===
 
{| class="wikitable"
{| class="wikitable"
|+ Key inputs
|+Economic links to cash flow patterns
!Description
!Value
!Commentary
|-
|-
| Which valuation model do you want to use?
!Cash flow type!!Introduction!!Growth!!Shake out!!Mature!!Decline
|Discounted cash flow  
| There are two main approaches to estimate the value of an investment:
# By calculating the present value of the investment's expected future cash flows (i.e. discounted cash flow valuation); and
#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 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, Stockhub suggests using the free cash flow valuation method (rather than the dividend discount model).
|-
|-
|Which financial forecasts to use?
|Operating|| style="background: red; color: white;" |-|| style="background: green; color: white;" |+
| Stockhub
| style="background: orange; color: white;" | +/-|| style="background: green; color: white;" |+|| style="background: red; color: white;" |-
|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>'''
|Investing|| style="background: red; color: white;" |-|| style="background: red; color: white;" |-|| style="background: orange; color: white;" |+/-|| style="background: red; color: white;" |-
| style="background: green; color: white;" | +
|-
|-
|Discount rate (%)
|Financing|| style="background: green; color: white;" |+|| style="background: green; color: white;" |+|| style="background: orange; color: white;" |+/-|| style="background: red; color: white;" |-|| style="background: orange; color: white;" |+/-
| 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 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 (%)
| 100%
| Research suggests that a suitable rate for a company in this growth stage (i.e. stage 2) is 100%.
 
|-
| colspan="3" |'''<div style="text-align: center;">Growth stage 3</div>'''
|-
|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 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 (%)
|100%
|Research suggests that a suitable rate for a company in this growth stage (i.e. stage 3) is 100%.


=== Beta risk profile ===
{| class="wikitable"
|+
!Beta value
!Risk rating
|-
|-
| colspan="3" |'''<div style="text-align: center;">Growth stage 4</div>'''
|style="background: green; color: white;" |0 to 0.50
|-
|style="background: green; color: white;" | Low
|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 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 (%)
| 100%
|Research suggests that a suitable rate for a company in this growth stage (i.e. stage 4) is 100%.
 
|-
| colspan="3" |'''<div style="text-align: center;">Other key inputs</div>'''
|-
|What's the current value of the company?
|$688 billion
|As at 30th May 2022, the Stockhub company estimates 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.
|}
 
===Sensitive analysis===
 
The main inputs that result in the greatest change in the expected return of the Tesla investment are, in order of importance (from highest to lowest):  
 
#The size of the total addressable market (the default time-weighted average rate is $3.0 trillion);
#Tesla peak market share (the default share is 10%); and
#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.
 
{| class="wikitable sortable"
|+Tesla investment expected return sensitive analysis
!Main input
!50% worse
!Unchanged
!50% better
|-
|-
|The size of the total addressable market
|style="background: orange; color: white;" | 0.50 to 1.50
|(14%)
|style="background: orange; color: white;" | Medium
|72%
|158%
|-
|-
|Tesla peak market share
|style="background: red; color: white;" | 1.50 to 3.00
|(14%)
|style="background: red; color: white;" | High
| 72%
| 158%
|-
|-
|The discount rate
|style="background: purple; color: white;" | 3.00 and above
 
|style="background: purple; color: white;" | Extremely high
|30%
|72%
| 136%
 
|}
|}


==Appendix==
=== Phoenix adjusted beta calculation ===
 
=== Financial statements ===
{| class="wikitable"
{| class="wikitable"
|+Balance sheet
|+
!Year end date
!Date
!31/12/2021
!iShares MSCI World ETF unit price (USD)
!31/12/2020
!Phoenix share price (GBP)
!31/12/2019
!iShares MSCI World ETF unit price change (%)
!31/12/2018
!Phoenix share price change (%)
|-
|-
|'''Current Assets'''
|01/11/2019
|
|96.76
|
|745.50
|
|
|
|
|-
|-
|Cash and Cash Equivalents ($million)
|01/12/2019
|$17,576
|98.78
|$19,384
|749.00
|$6,268
|2.09%
|$3,879
|0.47%
|-
|-
|Short-Term Investments ($million)
|01/01/2020
|$131
|97.73
| --
|758.00
| --
| -1.06%
| --
|1.20%
|-
|-
|Net Receivables ($million)
|01/02/2020
|$1,913
|89.67
|$1,886
|691.20
|$1,324
| -8.25%
|$949
| -8.81%
|-
|-
|Inventory ($million)
|01/03/2020
|$5,757
|77.93
|$4,101
|626.60
|$3,552
| -13.09%
|$3,113
| -9.35%
|-
|-
|Other Current Assets ($million)
|01/04/2020
|$1,723
|86.36
|$1,346
|601.00
|$959
|10.82%
|$366
| -4.09%
|-
|-
|Total Current Assets ($million)
|01/05/2020
|$27,100
|90.70
|$26,717
|616.20
|$12,103
|5.03%
|$8,307
|2.53%
|-
|-
|'''Long-Term Assets'''
|01/06/2020
|
|92.14
|
|644.00
|
|1.59%
|
|4.51%
|-
|-
|Long-Term Investments ($million)
|01/07/2020
| --
|96.65
| --
|658.60
| --
|4.89%
|$422
|2.27%
|-
|-
|Fixed Assets ($million)
|01/08/2020
|$25,411
|102.96
|$17,396
|692.00
|$14,061
|6.53%
|$13,420
|5.07%
|-
|-
|Goodwill ($million)
|01/09/2020
|$200
|99.52
|$207
|688.20
|$198
| -3.34%
|$68
| -0.55%
|-
|-
|Intangible Assets ($million)
|01/10/2020
|$257
|96.53
|$313
|662.40
|$339
| -3.00%
|$282
| -3.75%
|-
|-
|Other Assets ($million)
|01/11/2020
|$9,163
|108.94
|$7,515
|716.80
|$7,608
|12.86%
|$7,241
|8.21%
|-
|-
|Deferred Asset Charges ($million)
|01/12/2020
| --
|112.41
| --
|700.60
| --
|3.19%
| --
| -2.26%
|-
|-
|Total Assets ($million)
|01/01/2021
|$62,131
|111.49
|$52,148
|674.80
|$34,309
| -0.82%
|$29,740
| -3.68%
|-
|-
|'''Current Liabilities'''
|01/02/2021
|
|114.27
|
|710.00
|
|2.49%
|
|5.22%
|-
|-
|Accounts Payable ($million)
|01/03/2021
|$15,744
|118.49
|$9,906
|734.20
|$6,993
|3.69%
|$5,499
|3.41%
|-
|-
|Short-Term Debt / Current Portion of Long-Term Debt ($million)
|01/04/2021
|$1,589
|123.61
|$2,132
|711.40
|$1,785
|4.32%
|$2,568
| -3.11%
|-
|-
|Other Current Liabilities ($million)
|01/05/2021
|$2,372
|125.60
|$2,210
|735.60
|$1,889
|1.61%
|$1,926
|3.40%
|-
|-
|Total Current Liabilities ($million)
|01/06/2021
|$19,705
|126.57
|$14,248
|676.40
|$10,667
|0.77%
|$9,993
| -8.05%
|-
|-
|Long-Term Debt ($million)
|01/07/2021
|$5,245
|128.83
|$9,556
|679.40
|$11,634
|1.79%
|$9,404
|0.44%
|-
|-
|Other Liabilities ($million)
|01/08/2021
|$3,546
|132.02
|$3,330
|623.40
|$2,691
|2.48%
|$3,039
| -8.24%
|-
|-
|Deferred Liability Charges ($million)
|01/09/2021
|$2,052
|126.46
|$1,284
|645.60
|$1,207
| -4.21%
|$991
|3.56%
|-
|-
|Misc. Stocks ($million)
|01/10/2021
|$826
|133.84
|$850
|656.60
|$849
|5.84%
|$834
|1.70%
|-
|-
|Minority Interest ($million)
|01/11/2021
|$568
|131.10
|$655
|640.20
|$643
| -2.05%
|$556
| -2.50%
|-
|-
|Total Liabilities ($million)
|01/12/2021
|$31,374
|135.32
|$29,268
|653.20
|$27,048
|3.22%
|$24,261
|2.03%
|-
|-
|'''Stock Holders Equity'''
|01/01/2022
|
|128.32
|
|660.20
|
| -5.17%
|
|1.07%
|-
|-
|Common Stocks ($million)
|01/02/2022
|$1
|124.58
|$1
|618.60
|$1
| -2.91%
| --
| -6.30%
|-
|-
|Capital Surplus ($million)
|01/03/2022
|$331
|128.16
| style="color: red;" |-$5,399
|614.00
| style="color: red;" |-$6,083
|2.87%
| style="color: red;" |-$5,318
| -0.74%
|-
|-
|Retained Earnings
|01/04/2022
| --
|117.42
| --
|609.00
| --
| -8.38%
| --
| -0.81%
|-
|-
|Treasury Stock ($million)
|01/05/2022
|$29,803
|117.94
|$27,260
|637.60
|$12,736
|0.44%
|$10,249
|4.70%
|-
|-
|Other Equity ($million)
|01/06/2022
|$54
|106.88
|$363
|590.40
| style="color: red;" |-$36
| -9.38%
| style="color: red;" |-$8
| -7.40%
|-
|-
|Total Equity ($million)
|01/07/2022
|$30,189
|115.57
|$22,225
|643.80
|$6,618
|8.13%
|$4,923
|9.04%
|-
|-
|Total Liabilities & Equity ($million)
|01/08/2022
|$62,131
|110.28
|$52,148
|602.40
|$34,309
| -4.58%
|$29,740
| -6.43%
|}
 
{| class="wikitable"
|+Cash flow
!Year end date
!31/12/2021
!31/12/2020
!31/12/2019
!31/12/2018
|-
|-
|Net Income ($million)
|01/09/2022
|$5,519
|99.95
|$721
|526.80
| style="color: red;" |-$862
| -9.37%
| style="color: red;" |-$976
| -12.55%
|-
|-
|'''Cash Flows-Operating Activities'''
|01/10/2022
|
|107.42
|
|542.40
|
|7.47%
|
|2.96%
|-
|-
|Depreciation ($million)
|01/11/2022
|$2,911
|115.44
|$2,322
|588.80
|$2,154
|7.47%
|$2,060
|8.55%
|-
|-
|Net Income Adjustments ($million)
|01/12/2022
|$2,424
|109.25
| $2,575
|608.60
| $1,375
| -5.36%
| $1,043
|3.36%
|-
|-
|'''Changes in Operating Activities'''
|01/01/2023
|
|117.01
|
|640.80
|
|7.10%
|
|5.29%
|-
|Accounts Receivable ($million)
| style="color: red;" |-$130
| style="color: red;" |-$652
| style="color: red;" |-$367
| style="color: red;" |-$497
|-
|Changes in Inventories ($million)
| style="color: red;" |-$1,709
| style="color: red;" |-$422
| style="color: red;" |-$429
| style="color: red;" |-$1,023
|-
|Other Operating Activities ($million)
| style="color: red;" |-$3,676
| style="color: red;" |-$1,667
| style="color: red;" |-$937
| style="color: red;" |-$504
|-
|Liabilities ($million)
|$6,033
|$2,925
|$1,384
|$2,082
|-
|Net Cash Flow-Operating ($million)
| $11,497
| $5,943
| $2,405
|$2,098
|-
|'''Cash Flows-Investing Activities'''
|
|
|
|
|-
|-
|Capital Expenditures ($million)
|01/02/2023
| style="color: red;" |-$6,514
|113.98
| style="color: red;" |-$3,232
|633.40
| style="color: red;" |-$1,432
| -2.59%
| style="color: red;" |-$2,319
| -1.15%
|-
|-
|Investments ($million)
|01/03/2023
| style="color: red;" |-$132
|117.67
| --
|546.40
| --
|3.24%
| --
| -13.74%
|-
|-
|Other Investing Activities ($million)
|01/04/2023
| style="color: red;" |-$1,222
|119.79
|$100
|591.80
| style="color: red;" |-$4
|1.80%
| style="color: red;" |-$18
|8.31%
|-
|-
|Net Cash Flows-Investing ($million)
|01/05/2023
| style="color: red;" |-$7,868
|118.60
| style="color: red;" |-$3,132
|552.40
| style="color: red;" |-$1,436
| -0.99%
| style="color: red;" |-$2,337
| -6.66%
|-
|-
|'''Cash Flows-Financing Activities'''
|01/06/2023
|
|124.52
|
|531.80
|
|4.99%
|
| -3.73%
|-
|-
|Sale and Purchase of Stock ($million)
|01/07/2023
|$699
|128.54
|$12,675
|550.20
|$1,555
|3.23%
|$727
|3.46%
|-
|-
|Net Borrowings ($million)
|01/08/2023
| style="color: red;" |-$5,732
|125.70
| style="color: red;" |-$2,488
|521.00
|$798
| -2.21%
|$89
| -5.31%
|-
|-
|Other Financing Activities ($million)
|01/09/2023
| --
|120.17
| --
|482.20
| --
| -4.40%
| --
| -7.45%
|-
|-
|Net Cash Flows-Financing ($million)
|01/10/2023
| style="color: red;" |-$5,203
|117.11
|$9,973
|453.80
|$1,529
| -2.55%
|$574
| -5.89%
|-
|-
|Effect of Exchange Rate ($million)
|01/11/2023
| style="color: red;" |-$183
|127.78
|$334
|465.20
|$8
|9.11%
| style="color: red;" |-$23
|2.51%
|-
|-
|Net Cash Flow ($million)
|01/12/2023
| style="color: red;" |-$1,757
|133.02
|$13,118
|535.20
|$2,506
|4.10%
|$312
|15.05%
|}
 
{| class="wikitable"
|+Income statement
!Year end date
!31/12/2021
!31/12/2020
!31/12/2019
!31/12/2018
|-
|-
|Total Revenue
|01/01/2024
|$53,823
|134.20
|$31,536
|505.40
|$24,578
|0.89%
|$21,461
| -5.57%
|-
|-
|Cost of Revenue
|01/02/2024
|$40,217
|140.28
|$24,906
|497.30
|$20,509
|4.53%
|$17,419
| -1.60%
|-
|-
|'''Gross Profit'''
|01/03/2024
|'''$13,606'''
|144.91
|'''$6,630'''
|552.60
|'''$4,069'''
|3.30%
|'''$4,042'''
|11.12%
|-
|-
|'''Operating Expenses'''
|01/04/2024
|
|139.17
|
|489.80
|
| -3.96%
|
| -11.36%
|-
|-
|Research and Development
|01/05/2024
|$2,593
|145.71
|$1,491
|496.20
|$1,343
|4.70%
|$1,460
|1.31%
|-
|-
|Sales, General and Admin.
|01/06/2024
|$4,517
|147.49
|$3,145
|521.50
|$2,646
|1.22%
|$2,835
|5.10%
|-
|-
|Non-Recurring Items
|01/07/2024
| style="color: red;" |-$27
|149.97
| --
|547.00
|$149
|1.68%
|$135
|4.89%
|-
|-
|Other Operating Items
|01/08/2024
| --
|154.18
| --
|565.50
| --
|2.81%
| --
|3.38%
|-
|-
|'''Operating Income'''
|01/09/2024
|'''$6,523'''
|156.91
|'''$1,994'''
|559.50
|style="color: red;" |'''-$69'''
|1.77%
|style="color: red;" |'''-$388'''
| -1.06%
|-
|-
|Add'l income/expense items
|01/10/2024
| $191
|153.73
| style="color: red;" |-$92
|491.20
| $89
| -2.03%
|$46
| -12.21%
|-
|-
|Earnings Before Interest and Tax
|01/11/2024
|$6,714
|160.13
|$1,902
|492.00
|$20
|4.16%
| style="color: red;" |-$342
|0.16%
|-
|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'''
|}
|}
===Relative valuation approach===
====What's the expected return of an investment in Tesla?====
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 inputs
|+Phoenix beta and adjusted beta value
!Description
!
!Value
!Value
!Commentary
!Comment(s)
|-
|-
| Which type of multiple do you want to use?
!Beta
| Growth-adjusted EV/sales
|0.642647
| 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?
!Adjusted beta
 
|0.761765
|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 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 ===
{| class="wikitable"
|+Economic links to cash flow patterns
|-
!Cash flow type!!Introduction!!Growth!!Shake out!!Mature!!Decline
|-
|Operating|| style="background: red; color: white;" |-|| style="background: green; color: white;" |+
| style="background: orange; color: white;" | +/-|| style="background: green; color: white;" |+|| style="background: red; color: white;" |-
|-
|Investing|| style="background: red; color: white;" |-|| style="background: red; color: white;" |-|| style="background: orange; color: white;" |+/-|| style="background: red; color: white;" |-
| style="background: green; color: white;" | +
|-
|Financing|| style="background: green; color: white;" |+|| style="background: green; color: white;" |+|| style="background: orange; color: white;" |+/-|| style="background: red; color: white;" |-|| style="background: orange; color: white;" |+/-
|}
|}


== Notes==
=== Cost of equity ===
 
'''Bid-ask spread'''
 
The bid–ask spread is the difference between the prices quoted for an immediate sale (ask) and an immediate purchase (bid) for the investment.
 
For example, if the price to buy an investment is $663.90 and the price to sell the investment is $663.89, the bid-ask spread of the investment is $0.01 (i.e.$663.90 minus $663.89). Converting the figure into percentage, the bid-ask spread is 0.0015063% (i.e. $0.01 divided by $663.90).
 
'''Investment risk'''
 
Research shows that an investment has two main types of risks: 1) non-systematic and 2) systematic. Systematic risk is the risk related to the overall market, and non-systematic risk is the risk that's specific to an individual investment. Evidence shows that taking on non-systematic risk is inefficient, and it's, therefore, best to eliminate it; and in most cases, elimination is fairy easy to do [by holding a diversified portfolio of investments (i.e. around 15 investments)]. Accordingly, when assessing the riskiness of an investment, it’s best to look at the systematic risk only (i.e. ignore the non-systematic risk). A key measure of systematic risk is beta, and a main way to determine the riskiness of an investment is to compare the beta of the investment with the beta of the market, which is 1. For example, Tesla's beta is 2.12, and is, accordingly, 112% above the market beta (of 1); assuming that a 'high' level of riskiness is 50% or more above the market beta, then the riskiness of investing in Tesla is considered to be 'high' (112%>50%).
 
{| class="wikitable"
{| class="wikitable"
|+ Risk rating
|+Cost of equity (%)
!Input
!Input value
!Additional information
|-
|-
! Rating !! Beta
|Risk-free rate (%)
|4.473%
|Here, the risk free rate is the US 30 year treasury bond, and is calculated as at 11th November 2024.<ref>https://www.marketwatch.com/investing/bond/tmubmusd30y?countrycode=bx</ref> Research suggests that for the risk-free rate, it's best to use one that has the same or similar maturity to the estimated remaining lifespan of the company. Here, we have assumed that the estimated lifespan of the company is 50 years, so we have used the longest maturity, which is 30 years.
|-
|-
| style="background: green; color: white;" |Low || style="background: green; color: white;" |Equal to or below 0.5
|Adjusted beta
|0.76
|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.
|-
|-
| style="background: orange; color: white;" |Medium || style="background: orange; color: white;" |Between 0.5 and 1.5
|Equity risk premium (%)
|5.48%
|Here, the equity risk premium is in relation to the global region, and is calculated as at 1st July 2023.<ref>https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/ctryprem.html</ref> Research suggests that for the region of equity risk premium, it's best to use one that is the same or similar to the region of the beta market portfolio. Here, the region of the beta market portfolio is the world/global, so we have used the world/global region for the equity risk premium.
|-
|-
| style="background: red; color: white;" |High || style="background: red; color: white;" |Equal to or above 1.5
|Cost of equity (%)
|8.64%
|Cost of equity = Risk-free rate + Beta x Equity risk premium.
|}
|}


==Actions==
== References ==
 
__INDEX__
To invest in Tesla, click [https://www.hl.co.uk/shares/shares-search-results/t/tesla-inc-usd0.001/buy-and-sell-shares here].
 
To contact Tesla, click [mailto:ir@tesla.com here].
 
==References==
<references />

Revision as of 21:22, 11 November 2024

Phoenix Group Holdings is committed to helping people achieve a secure financial future, offering innovative retirement solutions and long-term savings products.

The company operates as a leading UK life and pensions provider, specialising in retirement solutions, long-term savings, and investment management. Phoenix prioritises the delivery of value-driven investments with a strong emphasis on environmental, social, and governance (ESG) principles, ensuring that its investment portfolios align with the evolving needs of its customers and society. Phoenix also focuses on managing long-term liabilities and capital efficiency, seeking to provide sustainable financial growth while supporting the retirement security of its policyholders.

Assuming Phoenix Group maintains a steady market position in the life insurance and pensions sectors, with modest growth in its asset management services, the expected return of an investment in the company over the next five years is positive 16%, which equates to an annual return of 3.1%. In other words, an £100,000 investment in Phoenix Group is expected to return £116,000 in five years' time.

The degree of risk associated with an investment in Phoenix Group is ‘moderate’, with the shares having a beta that is 22% below the market (0.78 vs. 1). Additionally, Phoenix Group’s shares show a ‘medium’ level of liquidity, as evidenced by its bid-ask margin of 0.02%.

Accordingly, based on the assumptions provided on the Stockhub platform, an investment in the company is considered to be a ‘suitable’ one for you if, among other criteria, your required:

  • Return level is 3.1% per year or more in absolute terms;
  • Risk level is 22% below the market risk level;
  • Time horizon is five years or longer;
  • Bid-ask margin is 0.02% or more; and/or
  • Objective is to invest in a stable, long-term provider of pensions and insurance solutions that aligns with responsible investment principles.

Fun fact: Phoenix Group Holdings was founded in 1782 and has grown into one of the UK’s largest providers of long-term savings and retirement solutions. It primarily focuses on closed life funds and the acquisition of life insurance businesses.

Operations

How did the idea of the company come about?

Phoenix Group Holdings was created with the aim of acquiring and managing closed life insurance and pension funds. Founded in 2009, it evolved from the Phoenix Assurance Company, which had traditionally provided life insurance. The modern group focused on acquiring legacy insurance portfolios—companies that no longer wrote new policies but still had substantial liabilities. By acquiring underperforming insurers, Phoenix aimed to improve efficiency, optimise capital, and unlock value from these closed books, growing into a major consolidator in the UK life insurance sector.

What's the mission of the company?

The mission of Phoenix Group Holdings is to deliver long-term value for its shareholders, policyholders, and other stakeholders by efficiently managing and growing closed life insurance and pension businesses. The company focuses on maximising the value of legacy insurance portfolios through operational improvements, capital optimisation, and the responsible management of policyholder liabilities. Their goal is to ensure financial security for policyholders while achieving sustainable, profitable growth for investors.

What are the main offerings of the company?

Phoenix Group Holdings primarily offers closed-book life insurance and pension solutions. Their key offerings include:

  1. Life Insurance: Managing legacy life insurance policies that are no longer open to new customers, focusing on optimising the value of existing portfolios.
  2. Pension Schemes: Overseeing pension funds and annuities for individuals and institutions, ensuring they are managed efficiently.
  3. Asset Management: The company offers investment management services for the assets backing its insurance and pension liabilities.
  4. Investment and Capital Management: Phoenix Group aims to enhance the value of its acquired portfolios through strategic capital management, risk optimisation, and operational efficiency.

These offerings are centered around managing closed insurance and pension books, with a focus on long-term value creation for policyholders and investors.

What makes the offerings unique?

What makes Phoenix Group Holdings' offerings unique is their focus on managing closed-book insurance and pension portfolios, businesses that no longer write new policies but still have significant liabilities. This specialisation is backed by key facts:

  1. Specialisation in Closed-Book Management: Phoenix Group is one of the largest consolidators of closed life insurance and pension books in the UK, managing over £300 billion in assets. It has acquired major portfolios, including from Standard Life (2018) and ReAssure (2020), demonstrating its leadership in this niche market.
  2. Operational Efficiency: Phoenix has a proven track record of improving operational performance. Following the Standard Life acquisition, the company implemented cost-saving measures that led to over £50 million in annual savings. Additionally, its £1 billion cost-saving program announced in 2020 highlights its focus on streamlining operations and improving efficiency across its legacy portfolio.
  3. Capital and Liability Optimisation: Phoenix utilises advanced capital management techniques, such as those seen in the £1.1 billion pension scheme buyout from Standard Life, which helped reduce risk and unlock value. The group also manages liabilities efficiently through Solvency II capital management, ensuring long-term sustainability and optimised returns.
  4. Focus on Long-Term Stability: Phoenix’s commitment to long-term financial security for policyholders is reflected in its 200% solvency ratio, well above regulatory requirements. The group also reported 9% growth in operating profit in 2023, alongside a consistent dividend track record, underscoring its ability to provide steady returns to shareholders while meeting policyholder obligations.

These factors combine to make Phoenix Group’s offerings distinct, focusing on operational efficiencies, capital optimisation, and long-term stability in the management of legacy insurance and pension portfolios.

From which place(s) are the offerings able to be purchased?

Phoenix Group's offerings are primarily available to existing policyholders and pension plan participants through their legacy insurance portfolios. Since the company focuses on managing closed books (policies no longer open for new customers), its products are not available for purchase by new clients. Instead, Phoenix manages and services existing life insurance and pension policies that were previously sold by acquired businesses.

Their offerings are available in the UK, where they have a significant presence, and the company’s services are accessible to policyholders through their digital platforms, customer service teams, and financial advisors. Additionally, Phoenix Group has operations in various European markets through acquired businesses. However, new policy purchases are not part of their current business model.

From which place(s) are the offerings promoted?

Phoenix Group's offerings are primarily promoted in the UK and Ireland, where it has a strong presence. The company's promotional efforts focus on:

  1. Existing Customers: Phoenix promotes its services and offerings to current policyholders through direct communications, customer support, and digital channels, emphasising the management of legacy insurance and pension portfolios.
  2. Investor Relations: Phoenix also promotes its financial products and services to investors, showcasing its strategy of acquiring and managing closed books, through annual reports, investor presentations, and shareholder updates.
  3. Acquired Businesses: The company may also promote its offerings indirectly through the brands of acquired insurers, such as Standard Life and Scottish Widows, which still serve policyholders under the Phoenix Group umbrella.
  4. Digital Platforms: Phoenix Group also uses its websites and digital platforms to communicate with both policyholders and investors, promoting its financial management strategies and policyholder services.

Overall, promotion is largely directed at existing stakeholders, given the closed-book nature of its business model.

What's the current strategy of the company?

Phoenix Group's current strategy focuses on sustainable growth, capital optimisation, and maximising the value of legacy insurance and pension portfolios. Key aspects of the strategy include:

  1. Acquisitions and Consolidation: Phoenix continues to grow by acquiring and managing closed-book life insurance and pension portfolios, enhancing its scale and operational efficiency. They focus on integrating acquired businesses, such as Standard Life, and improving their profitability.
  2. Operational Efficiency: The group aims to optimise its cost base, improve capital efficiency, and maximise returns from its existing portfolio of life insurance and pension policies. This includes enhancing digital services and improving customer experience for policyholders.
  3. Responsible Capital Management: Phoenix focuses on managing its capital efficiently to support growth and provide attractive returns to shareholders. This includes maintaining a strong balance sheet and ensuring adequate liquidity.
  4. Sustainability and Responsible Investment: The company is increasingly focused on aligning its operations with sustainable practices, including responsible investing, to meet evolving regulatory requirements and enhance long-term value.
  5. Customer-Centric Approach: While not writing new policies, Phoenix aims to deliver strong value for existing policyholders by managing their policies effectively, providing transparent communications, and focusing on delivering on the promises made to them.

Overall, Phoenix Group's strategy is centered around strengthening its position as a leading consolidator of closed life and pension books, while ensuring long-term growth and value creation for both policyholders and investors.

Competition

Phoenix Group, as a leading life insurance and pension provider primarily focused on managing closed insurance books and pensions in the UK, faces competition from companies with similar business models or overlapping areas in insurance, asset management, and retirement solutions. Key competitors include:

  1. Legal & General Group (L&G): L&G competes with Phoenix in life insurance, pensions, and retirement products. It also has significant expertise in asset management and bulk annuities, making it a major player in managing large pension schemes.
  2. Aviva: Aviva is another significant UK-based competitor in life insurance and pensions. Aviva provides services in retirement planning, life insurance, and asset management. Its focus on digital transformation and customer engagement is a strategic advantage.
  3. Swiss Re (ReAssure): Phoenix acquired ReAssure from Swiss Re in 2020, a move that underscored the competitive landscape in closed life books. Swiss Re remains an indirect competitor, as it focuses on reinsurance and has relationships with other UK life insurers and closed-book specialists.
  4. Standard Life (part of Phoenix) and Scottish Widows (Lloyds Banking Group): Scottish Widows competes in the pensions and life insurance markets. It also provides pension de-risking solutions and bulk annuity products, similar to Phoenix’s focus, especially through Standard Life.
  5. M&G plc: M&G combines asset management with pension solutions and life insurance products. As an investment manager, it competes with Phoenix in asset management and pension scheme management. Its pension expertise is a key overlap with Phoenix’s retirement-focused services.
  6. Rothesay Life: Rothesay Life is a specialist insurer focusing on bulk annuities and pension de-risking solutions. It’s a major player in managing pension liabilities, directly competing with Phoenix in acquiring large closed pension books.

Phoenix Group's core strategy centers around closed book acquisitions, bulk annuities, and retirement-focused services, which makes companies specialising in managing long-term pension liabilities and closed books its closest competitors. Additionally, the push toward digital transformation, asset management capabilities, and pension de-risking solutions is common among these firms, placing them in a tight competitive landscape.

Market

To understand Phoenix Group’s market opportunity, let’s look at its Total Addressable Market (TAM), Serviceable Available Market (SAM), and Serviceable Obtainable Market (SOM), specifically in the context of its primary business lines, which include closed-book life insurance, open-book insurance, Bulk Purchase Annuities (BPAs), and retirement solutions.

1. Total Addressable Market (TAM)

  • Definition: The TAM is the total revenue opportunity available if Phoenix Group could achieve 100% market share in all its target sectors.
  • Market Size: The TAM for Phoenix includes:
    • The global life insurance market, especially in regions with significant closed-book insurance business (UK, Europe, some parts of North America).
    • The global pension market, as companies seek to offload pension liabilities via Bulk Purchase Annuities (BPAs).
    • The global retirement solutions and wealth management market, given the increasing demand for retirement products as populations age.
  • Estimated TAM: For Phoenix, the TAM is likely in the trillions in GBP, as the global life insurance market alone is estimated to be worth several trillion dollars annually. However, for closed-book management and pension buyouts specifically, estimates suggest an addressable market in the hundreds of billions, particularly in Europe and North America, where regulatory and aging demographics drive demand.

2. Serviceable Available Market (SAM)

  • Definition: The SAM represents the portion of the TAM that Phoenix Group could realistically service, given its specific focus and operational capabilities.
  • Market Focus:
    • UK and European Closed-Book Life Insurance: Phoenix Group is one of the largest consolidators of closed-book policies in the UK and Europe. The closed-book market in Europe alone is estimated to hold £300 billion to £400 billion in assets under management.
    • Bulk Purchase Annuities (BPA): In the UK, the BPA market has seen significant growth, with estimates suggesting it’s worth around £30 billion annually. As more companies offload pension liabilities, this market is expected to grow.
    • UK Retirement and Wealth Solutions: Given its acquisition of Standard Life and expansion into the open-book market, Phoenix can also tap into the retirement solutions market, worth an estimated £1 trillion in the UK alone.
  • Estimated SAM: For Phoenix, the SAM is likely in the hundreds of billions of pounds, focusing primarily on the UK and European closed-book life insurance market, BPAs, and retirement solutions.

3. Serviceable Obtainable Market (SOM)

  • Definition: The SOM is the portion of the SAM that Phoenix Group can realistically capture, given competition, regulatory constraints, and its existing market share.
  • Competitive Position:
    • Closed-Book Consolidation: Phoenix already holds a significant market share in the UK closed-book insurance market. Its scale, expertise, and established relationships position it to capture a substantial portion of this market. Realistically, Phoenix could maintain a 10-20% share of the UK and European closed-book market, equating to £30-60 billion.
    • BPAs: Phoenix is actively growing its presence in the BPA market. Given competition from other insurers like Legal & General, Phoenix might capture 5-10% of the BPA market, which could mean around £1.5-3 billion annually.
    • Retirement and Wealth Solutions: This is a competitive market with players like Aviva, Prudential, and Standard Life. Phoenix’s SOM here could be around 5%, or £50 billion, within the UK retirement solutions market.
  • Estimated SOM: Combining these factors, Phoenix’s SOM might realistically be between £80 billion to £120 billion across its primary markets. This includes substantial market share in closed-book management, a growing foothold in BPAs, and a smaller but strategic presence in retirement solutions.

Summary of TAM, SAM, and SOM for Phoenix Group:

Metric Market Size Key Focus Areas
TAM (Total Addressable Market) £1+ trillion Global life insurance, pensions, retirement solutions
SAM (Serviceable Available Market) £200-400 billion UK and European closed-book, BPAs, UK retirement solutions
SOM (Serviceable Obtainable Market) £80-120 billion UK and European closed-book, BPAs, retirement solutions in the UK

Phoenix’s strengths in closed-book consolidation, its expanding BPA business, and retirement solutions provide it with a substantial and accessible market within the broader insurance and retirement sector. This focus allows it to capitalise on predictable cash flows from closed books and emerging opportunities in BPAs, while building a foothold in the growing retirement market.

Team

As of 2024, the key members of the leadership team at Phoenix Group Holdings include:

Andy Briggs – Group Chief Executive Officer

Andy Briggs has been the CEO of Phoenix Group since 2015 and leads the company's strategic direction, focusing on growth through acquisitions and operational efficiency.

Clare Bousfield – Group Chief Financial Officer

Clare Bousfield oversees financial strategy, capital management, and reporting, ensuring the group's financial health and sustainable growth.

Keith Skeoch – Chairman

Keith Skeoch is the Chairman of Phoenix Group and has significant experience in financial services. He provides leadership and governance to the board.

Ian McKenna – Chief Risk Officer

Ian McKenna is responsible for overseeing risk management at Phoenix Group, ensuring that operational, financial, and regulatory risks are effectively managed.

Paul Brewer – Chief Operating Officer

Paul Brewer manages the operational aspects of Phoenix Group, including business integration from acquisitions and optimising customer service.

The leadership team is supported by various senior managers responsible for specific business areas such as investments, legal and compliance, and technology.

Risks

As with any investment, investing in Phoenix Group Holdings carries a level of risk. Overall, based on the Phoenix Group Holdings' adjusted beta (i.e. 0.76), the degree of risk associated with an investment in Phoenix Group Holdings is 'medium'.

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 'medium' risk, it must have a beta value of between 0.50 and 1.00. Further information about the beta ratings can be found in the appendix section of this report.

The key risks can be found below. For us, currently, the biggest risk to the valuation of the company relates to interest rate volatility (i.e. interest rate risk).

1. Regulatory and Legislative Risks

  • Solvency II and Capital Requirements: As an insurer, Phoenix is subject to Solvency II regulations, which require insurers to hold a certain level of capital relative to their liabilities. Changes in these regulations or an increase in capital requirements could force Phoenix to retain more capital, reducing its flexibility and potentially impacting dividend payments.
  • Pension and Insurance Regulation Changes: Since Phoenix operates heavily in the pensions and retirement solutions sectors, any adverse changes in pension or tax legislation could impact demand for its products, profitability, and its Bulk Purchase Annuities (BPA) business.
  • Climate and ESG Regulation: Increasingly strict Environmental, Social, and Governance (ESG) requirements are pushing insurers to adjust investment portfolios to meet regulatory guidelines. Phoenix might need to divest from certain assets, which could reduce investment returns.

2. Interest Rate and Investment Yield Risks

  • Low Yield Environment: A substantial portion of Phoenix's revenues comes from the investment returns on its policyholder funds. In a low-interest-rate environment, the company may struggle to generate adequate returns on its investment portfolio, which can impact profitability and dividend payouts.
  • Rising Interest Rates: While rising interest rates might benefit Phoenix’s investment returns, they also increase discount rates, which can reduce the value of Phoenix's long-term liabilities, including its bulk purchase annuity (BPA) business. Higher rates can also reduce the value of the bond-heavy portfolios often held by insurers.
  • Market Volatility: A significant portion of Phoenix's assets is invested in fixed-income securities. Market volatility can cause fluctuations in the value of these investments, impacting the solvency position, especially if there’s a sudden downturn.

3. Longevity and Mortality Risk

  • Longevity Risk: Phoenix bears longevity risk, as it is responsible for paying benefits as long as policyholders live. Longer life expectancies increase the liabilities on Phoenix’s books, potentially eroding profitability, particularly for its annuity and pension businesses.
  • Mortality Risk: Unforeseen mortality events (e.g., pandemics) could lead to higher-than-expected claims, increasing Phoenix's short-term liabilities and impacting its solvency position.

4. Competition and Market Dynamics

  • Intense Competition: Phoenix faces competition from other insurers, especially in the bulk purchase annuity (BPA) market, where players like Legal & General and Aviva have strong market positions. Competition could impact Phoenix’s ability to acquire new business profitably.
  • New Market Entrants: As Phoenix expands into open-book insurance and retirement solutions, it faces competition from established life insurers and pension providers, which may make it difficult to gain significant market share in these areas.

5. Acquisition Integration and Execution Risks

  • Dependence on Acquisitions: Phoenix's growth strategy is heavily reliant on acquiring closed-book life insurance portfolios and expanding into BPAs. However, integrating these acquisitions can be complex and costly. Any difficulties in integrating new acquisitions could affect Phoenix’s operational efficiency and financial performance.
  • Integration Challenges: Acquisitions bring challenges, from technology integration to operational alignment. Phoenix’s success in generating returns relies on its ability to integrate and manage these new books effectively, which is not always guaranteed.

6. Liquidity and Refinancing Risks

  • Debt Levels and Refinancing: Phoenix Group uses debt financing to fund some of its acquisitions. If the cost of debt rises (e.g., due to increasing interest rates or a change in credit rating), it could increase financing costs and reduce cash available for dividends and expansion.
  • Liquidity Constraints: In a market downturn, Phoenix may need to access capital markets to fund operations or meet capital requirements. Limited access to liquidity or higher-than-expected costs could negatively impact Phoenix’s stability.

7. Reputation and Brand Risk

  • Customer Trust and Brand Value: Phoenix relies on a strong brand, especially in retirement and pension solutions. Negative publicity or poor customer experience, especially following an acquisition, could erode brand trust and hinder its growth efforts.
  • ESG and Social Responsibility: As public and investor scrutiny of ESG practices grows, any misalignment or failure to meet ESG standards could damage Phoenix’s reputation and investor appeal.

8. Operational and Technological Risks

  • Cybersecurity: Phoenix holds vast amounts of sensitive policyholder information. Any breach could lead to financial losses, reputational damage, and regulatory scrutiny.
  • Legacy System Management: With Phoenix’s expansion through acquisitions, the company must integrate various IT and data systems effectively. Operational disruptions, system failures, or integration issues could impact service levels and increase operational costs.

Valuation

Dividend Discount Model

To calculate the value of Phoenix Group using the Dividend Discount Model (DDM), we need to follow the basic formula for a Constant Growth Dividend Discount Model:

Value of the Stock (V)=r−gD1​​

Where:

  • D1​ = the expected dividend in the next period (i.e., the next year).
  • r = the required rate of return or cost of equity.
  • g = the expected growth rate of dividends.

Step-by-Step Calculation

  1. Find Expected Dividend (D1​)
    • Let’s assume Phoenix’s expected dividend in the next period is £0.30 per share (this is an assumption, so you should replace it with actual forecast data if available).
  2. Cost of Equity (r)
    • From earlier, we estimated Phoenix's cost of equity (using CAPM) to be around 8.9%.
  3. Dividend Growth Rate (g)
    • Phoenix’s dividends have been relatively stable, with moderate growth. Let’s assume an expected dividend growth rate of 2% per year.

Putting it into the formula:

V=0.089−0.020.30​=0.0690.30​ V≈4.35

Interpretation:

The value of Phoenix Group based on the DDM is approximately £4.35 per share, assuming the expected dividend for the next year is £0.30, the cost of equity is 8.9%, and the growth rate of dividends is 2%.

Important Considerations:

  • The accuracy of this model is highly dependent on the accuracy of the dividend forecast, cost of equity, and growth rate. Any changes to these assumptions would significantly affect the outcome.
  • This model is most suitable for companies with stable and predictable dividend policies, such as Phoenix Group, but it may not fully capture other aspects of value, such as potential capital gains or market changes.

Appendix

Dividend

Dividends
Interim Final Total Change (%)
2024 0.2665 0.2665
2023 0.2600 0.2665 0.5265 4%
2022 0.2480 0.2600 0.5080 4%
2021 0.2410 0.2480 0.4890 3%
2020 0.2340 0.2410 0.4750 1%
2019 0.2340 0.2340 0.4680 2%
2018 0.2260 0.2340 0.4600 -8%
2017 0.2510 0.2510 0.5020 -1%
2016 0.2670 0.2390 0.5060 -5%
2015 0.2670 0.2670 0.5340 0%
2014 0.2670 0.2670 0.5340 0%
2013 0.2670 0.2670 0.5340 12%
2012 0.2100 0.2670 0.4770 14%
2011 0.2100 0.2100 0.4200 0%
2010 0.2100 0.2100 0.4200
2009 0.1527 0.1527
Dividend
Mean Median Mode
Since inception 2% 1% 0%
Since the last five years 3% 3% #N/A
Since the last three years 3% 4% #N/A

Economic links to cash flow patterns

Economic links to cash flow patterns
Cash flow type Introduction Growth Shake out Mature Decline
Operating - + +/- + -
Investing - - +/- - +
Financing + + +/- - +/-

Beta risk profile

Beta value Risk rating
0 to 0.50 Low
0.50 to 1.50 Medium
1.50 to 3.00 High
3.00 and above Extremely high

Phoenix adjusted beta calculation

Date iShares MSCI World ETF unit price (USD) Phoenix share price (GBP) iShares MSCI World ETF unit price change (%) Phoenix share price change (%)
01/11/2019 96.76 745.50
01/12/2019 98.78 749.00 2.09% 0.47%
01/01/2020 97.73 758.00 -1.06% 1.20%
01/02/2020 89.67 691.20 -8.25% -8.81%
01/03/2020 77.93 626.60 -13.09% -9.35%
01/04/2020 86.36 601.00 10.82% -4.09%
01/05/2020 90.70 616.20 5.03% 2.53%
01/06/2020 92.14 644.00 1.59% 4.51%
01/07/2020 96.65 658.60 4.89% 2.27%
01/08/2020 102.96 692.00 6.53% 5.07%
01/09/2020 99.52 688.20 -3.34% -0.55%
01/10/2020 96.53 662.40 -3.00% -3.75%
01/11/2020 108.94 716.80 12.86% 8.21%
01/12/2020 112.41 700.60 3.19% -2.26%
01/01/2021 111.49 674.80 -0.82% -3.68%
01/02/2021 114.27 710.00 2.49% 5.22%
01/03/2021 118.49 734.20 3.69% 3.41%
01/04/2021 123.61 711.40 4.32% -3.11%
01/05/2021 125.60 735.60 1.61% 3.40%
01/06/2021 126.57 676.40 0.77% -8.05%
01/07/2021 128.83 679.40 1.79% 0.44%
01/08/2021 132.02 623.40 2.48% -8.24%
01/09/2021 126.46 645.60 -4.21% 3.56%
01/10/2021 133.84 656.60 5.84% 1.70%
01/11/2021 131.10 640.20 -2.05% -2.50%
01/12/2021 135.32 653.20 3.22% 2.03%
01/01/2022 128.32 660.20 -5.17% 1.07%
01/02/2022 124.58 618.60 -2.91% -6.30%
01/03/2022 128.16 614.00 2.87% -0.74%
01/04/2022 117.42 609.00 -8.38% -0.81%
01/05/2022 117.94 637.60 0.44% 4.70%
01/06/2022 106.88 590.40 -9.38% -7.40%
01/07/2022 115.57 643.80 8.13% 9.04%
01/08/2022 110.28 602.40 -4.58% -6.43%
01/09/2022 99.95 526.80 -9.37% -12.55%
01/10/2022 107.42 542.40 7.47% 2.96%
01/11/2022 115.44 588.80 7.47% 8.55%
01/12/2022 109.25 608.60 -5.36% 3.36%
01/01/2023 117.01 640.80 7.10% 5.29%
01/02/2023 113.98 633.40 -2.59% -1.15%
01/03/2023 117.67 546.40 3.24% -13.74%
01/04/2023 119.79 591.80 1.80% 8.31%
01/05/2023 118.60 552.40 -0.99% -6.66%
01/06/2023 124.52 531.80 4.99% -3.73%
01/07/2023 128.54 550.20 3.23% 3.46%
01/08/2023 125.70 521.00 -2.21% -5.31%
01/09/2023 120.17 482.20 -4.40% -7.45%
01/10/2023 117.11 453.80 -2.55% -5.89%
01/11/2023 127.78 465.20 9.11% 2.51%
01/12/2023 133.02 535.20 4.10% 15.05%
01/01/2024 134.20 505.40 0.89% -5.57%
01/02/2024 140.28 497.30 4.53% -1.60%
01/03/2024 144.91 552.60 3.30% 11.12%
01/04/2024 139.17 489.80 -3.96% -11.36%
01/05/2024 145.71 496.20 4.70% 1.31%
01/06/2024 147.49 521.50 1.22% 5.10%
01/07/2024 149.97 547.00 1.68% 4.89%
01/08/2024 154.18 565.50 2.81% 3.38%
01/09/2024 156.91 559.50 1.77% -1.06%
01/10/2024 153.73 491.20 -2.03% -12.21%
01/11/2024 160.13 492.00 4.16% 0.16%
Phoenix beta and adjusted beta value
Value Comment(s)
Beta 0.642647
Adjusted beta 0.761765

Cost of equity

Cost of equity (%)
Input Input value Additional information
Risk-free rate (%) 4.473% Here, the risk free rate is the US 30 year treasury bond, and is calculated as at 11th November 2024.[1] Research suggests that for the risk-free rate, it's best to use one that has the same or similar maturity to the estimated remaining lifespan of the company. Here, we have assumed that the estimated lifespan of the company is 50 years, so we have used the longest maturity, which is 30 years.
Adjusted beta 0.76 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.
Equity risk premium (%) 5.48% Here, the equity risk premium is in relation to the global region, and is calculated as at 1st July 2023.[2] Research suggests that for the region of equity risk premium, it's best to use one that is the same or similar to the region of the beta market portfolio. Here, the region of the beta market portfolio is the world/global, so we have used the world/global region for the equity risk premium.
Cost of equity (%) 8.64% Cost of equity = Risk-free rate + Beta x Equity risk premium.

References

  1. ↑ https://www.marketwatch.com/investing/bond/tmubmusd30y?countrycode=bx
  2. ↑ https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/ctryprem.html
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