Editing Tesla, Inc.
The edit can be undone. Please check the comparison below to verify that this is what you want to do, and then publish the changes below to finish undoing the edit.
Latest revision | Your text | ||
Line 1: | Line 1: | ||
{{ | {{Cover Image|[[File:5c603e0d86d2c7c005d1df44a jVVOsV8.jpg]]}} | ||
{{Short description|On a mission to accelerate the world's transition to sustainable energy.}} | |||
{| class="wikitable" | |||
|+ Key information | |||
|- | |||
| Risk/return|| [[Risk/return::High]] | |||
|- | |||
| Price per share|| [[Price per share::$303.35]]<ref name=":1">https://uk.finance.yahoo.com/quote/TSLA/profile?p=TSLA</ref> | |||
|- | |||
| Asset class|| [[Asset class::Equities]]<ref name=":2">https://sec.report/CIK/0001318605#:~:text=Tesla%2C%20Inc.%20is%20incorporated%20in,motor%20vehicles%20%26%20passenger%20car%20bodies.</ref> | |||
|- | |||
| Industry|| [[Industry::Consumer Cyclical]]<ref name=":1" /> | |||
|- | |||
| Country of incorporation|| [[Country of incorporation::United States]]<ref name=":2" /> | |||
|- | |||
| Minimum investment amount|| [[Minimum investment amount::$10]]<ref name=":10">https://www.business2community.com/stocks/buy-tesla-stock</ref> | |||
|- | |||
| Maximum investment amount|| [[Maximum investment amount::$950.54 billion]]<ref name=":1" /> | |||
|- | |||
| Current valuation|| [[Current valuation::$950.54 billion]]<ref name=":1" /> | |||
|- | |||
| Investor type|| [[Investor type::All]] | |||
|- | |||
| Bid/ask spread (%)|| [[Bid/ask spread::0.0015063%]]<ref name=":1" /> | |||
|- | |||
| Commission amount|| [[Commission amount::Zero]]<ref name=":10" /> | |||
|- | |||
| Market|| [[Market::Public]]<ref name=":1" /> | |||
|} | |||
==Summary== | |||
' | *Tesla is on a mission to accelerate the world's transition to sustainable energy.<ref name=":3">https://www.tesla.com/about</ref> | ||
*The company sells and leases high-performance fully electric vehicles and energy generation and storage systems, and offers services related to its products. Tesla emphasises performance, attractive styling and the safety of its users in the design and manufacture of its products and is continuing to develop full self-driving technology for improved safety. The company also strives to lower the cost of ownership for its customers through continuous efforts to reduce manufacturing costs and by offering financial and other services tailored to its products.<ref name=":4">https://www.sec.gov/Archives/edgar/data/1318605/000156459021004599/tsla-10k_20201231.htm</ref> | |||
* Assuming that Tesla increases its share of the automotive market to 10% (from 2%) and other assumptions, the expected return of an investment in the company over the next five years is negative 24%. In other words, an £1,000 investment in the company is expected to return £760 in five years time. | |||
* The degree of risk associated with an investment in Tesla is 'high', with the shares having a beta that is 112% above the market (2.12 vs. 1). | |||
==Operations== | ==Operations== | ||
Line 94: | Line 43: | ||
The idea of the company came about when the now founding team of the company realised that the current way that humankind is meeting its energy needs is unsustainable and bad for the planet.<ref name=":9">https://www.tesla.com/en_GB/blog/secret-tesla-motors-master-plan-just-between-you-and-me</ref> | The idea of the company came about when the now founding team of the company realised that the current way that humankind is meeting its energy needs is unsustainable and bad for the planet.<ref name=":9">https://www.tesla.com/en_GB/blog/secret-tesla-motors-master-plan-just-between-you-and-me</ref> | ||
Currently, an estimated 85% of the world's energy needs are met by burning fossil fuels<ref>https://wedocs.unep.org/bitstream/handle/20.500.11822/30797/EGR2019.pdf?sequence=1&isAllowed=y</ref>, and energy production and consumption are responsible for 76% of annual human-caused greenhouse gas emissions.<ref | Currently, an estimated 85% of the world's energy needs are met by burning fossil fuels<ref>https://wedocs.unep.org/bitstream/handle/20.500.11822/30797/EGR2019.pdf?sequence=1&isAllowed=y</ref>, and energy production and consumption are responsible for 76% of annual human-caused greenhouse gas emissions.<ref>https://www.climatewatchdata.org/ghg-emissions?breakBy=sector&chartType=percentage&end_year=2018§ors=total-including-lucf&start_year=1990</ref><ref>https://www.wri.org/insights/4-charts-explain-greenhouse-gas-emissions-countries-and-sectors</ref> | ||
Researching into a better way to meet the energy needs, the team concluded that the best way to do so is to move to a solar electric economy, from a mine-and-burn hydrocarbon economy.<ref name=":9" /> | Researching into a better way to meet the energy needs, the team concluded that the best way to do so is to move to a solar electric economy, from a mine-and-burn hydrocarbon economy.<ref name=":9" /> | ||
Line 511: | Line 460: | ||
[[File:Elon Musk Royal Society (crop2).jpg|200px]] | [[File:Elon Musk Royal Society (crop2).jpg|200px]] | ||
Elon Musk is the Chief Executive Officer of Tesla and has served the position since October 2008 and as a member of the Board since April 2004. Elon has also served as Chief Executive Officer, Chief Technology Officer and Chairman of Space Exploration Technologies Corporation, an advanced rocket and spacecraft manufacturing and services company (“SpaceX ”), since May 2002, and served as Chairman of the Board of SolarCity Corporation, a solar installation company, from July 2006 until its acquisition by Tesla in November 2016. Elon is also a founder of The Boring Company, an infrastructure company, and of Neuralink Corp., a company focused on developing brain-machine interfaces. Prior to SpaceX, Elon co-founded PayPal, an electronic payment system, which was acquired by eBay in October 2002, and Zip2 Corporation, a provider of Internet enterprise software and services, which was acquired by Compaq in March 1999. Elon has also served on the board of directors of Endeavor Group Holdings, Inc. since April 2021. Elon holds a B.A. in physics from the University of Pennsylvania and a B.S. in business from the Wharton School of the University of Pennsylvania. | |||
====Chief Financial Officer==== | ====Chief Financial Officer==== | ||
Line 600: | Line 549: | ||
==== All periods ==== | ==== All periods ==== | ||
{| class="wikitable" | {| class="wikitable" | ||
|+ | |+Historic financials<ref>Source: Stockhub Limited</ref><ref group="Note" name="Note04" /> | ||
|- | |- | ||
!Year | !Year | ||
Line 616: | Line 565: | ||
!'''16''' | !'''16''' | ||
!'''17''' | !'''17''' | ||
|- | |- | ||
|'''Year end date'''||'''31/12/2005'''||'''31/12/2006<ref name=":12">{{cite web|url=https://www.mercurynews.com/2014/07/14/2006-san-carlos-start-up-tesla-seeks-sexier-electric-car/|title=2006: San Carlos start-up Tesla seeks sexier electric car|date=July 14, 2014}}</ref><ref name="SEC">{{cite web | url=https://www.sec.gov/edgar/browse/?CIK=1318605 | title=Tesla, Inc. TSLA on Nasdaq | publisher=[[U.S. Securities and Exchange Commission]]}}</ref>'''||'''31/12/2007'''||'''31/12/2008'''||'''31/12/2009''' | |'''Year end date'''||'''31/12/2005'''||'''31/12/2006<ref name=":12">{{cite web|url=https://www.mercurynews.com/2014/07/14/2006-san-carlos-start-up-tesla-seeks-sexier-electric-car/|title=2006: San Carlos start-up Tesla seeks sexier electric car|date=July 14, 2014}}</ref><ref name="SEC">{{cite web | url=https://www.sec.gov/edgar/browse/?CIK=1318605 | title=Tesla, Inc. TSLA on Nasdaq | publisher=[[U.S. Securities and Exchange Commission]]}}</ref>'''||'''31/12/2007'''||'''31/12/2008'''||'''31/12/2009''' | ||
|'''31/12/2010<ref name="SEC" />''' | |'''31/12/2010<ref name="SEC" />''' | ||
|'''31/12/2011<ref name="SEC" />''' | |'''31/12/2011<ref name="SEC" />''' | ||
|'''31/12/2012<ref name="SEC" />''' | |'''31/12/2012<ref name="SEC" />''' | ||
|'''31/12/2013<ref name="SEC" />''' | |'''31/12/2013<ref name="SEC" />''' | ||
|'''31/12/2014<ref name="SEC" />''' | |'''31/12/2014<ref name="SEC" />''' | ||
|'''31/12/2015<ref name="SEC" />''' | |'''31/12/2015<ref name="SEC" />''' | ||
|'''31/12/2016<ref name="SEC" />''' | |'''31/12/2016<ref name="SEC" />''' | ||
|'''31/12/2017<ref name="SEC" />''' | |'''31/12/2017<ref name="SEC" />''' | ||
|'''31/12/2018<ref name="SEC" />''' | |'''31/12/2018<ref name="SEC" />''' | ||
|'''31/12/2019<ref name="SEC" />''' | |'''31/12/2019<ref name="SEC" />''' | ||
|'''31/12/2020<ref name="SEC" />''' | |'''31/12/2020<ref name="SEC" />''' | ||
|'''31/12/2021<ref name="SEC" />''' | |'''31/12/2021<ref name="SEC" />''' | ||
|''' | |- | ||
|' | | colspan="18" |<div style="text-align: center;">'''Income statement'''</div> | ||
| | |- | ||
| | |Revenues ($'million)|| 0||0||0.073||15||112 | ||
| | |117 | ||
| | |204 | ||
| | |413 | ||
| | |2,013 | ||
| | |3,198 | ||
|' | |4,046 | ||
| | |7,000 | ||
| | |11,759 | ||
| | |21,461 | ||
| | |24,578 | ||
| | |31,536 | ||
| | |53,823 | ||
| | |- | ||
| | |Net profits ($'million)||style="color: red;" |-12||style="color: red;" |-30||style="color: red;" |-78||style="color: red;" |-83|| style="color: red;" |−56 | ||
| | |style="color: red;" |−154 | ||
| | |style="color: red;" |−254 | ||
| | |style="color: red;" |−396 | ||
| | |style="color: red;" |−74 | ||
| | |style="color: red;" |−294 | ||
|''' | |style="color: red;" |−889 | ||
| | |style="color: red;" |−675 | ||
| | |style="color: red;" |−1,962 | ||
| | |style="color: red;" |−976 | ||
| | |style="color: red;" |−862 | ||
| | |721 | ||
| | |5,519 | ||
| | |- | ||
| | | colspan="18" |<div style="text-align: center;">'''Balance sheet'''</div> | ||
| | |- | ||
| | |Total assets<br />($'million) | ||
| | |8 | ||
| | |44 | ||
| | |34 | ||
| | |52 | ||
| | |130 | ||
| | |386 | ||
| | |713 | ||
| | |1,114 | ||
| | |2,417 | ||
|5,831 | |||
|8,068 | |||
|22,664 | |||
|28,655 | |||
|29,740 | |||
|34,309 | |||
|52,148 | |||
|62,131 | |||
|- | |- | ||
| | | colspan="18" |<div style="text-align: center;">'''Other'''</div> | ||
|''' | |||
|- | |- | ||
| | |Employees | ||
|NA | |||
|70 | |||
|268 | |||
|252 | |||
|514 | |||
|899 | |||
|1,417 | |||
|2,914 | |||
|5,859 | |||
|10,161 | |||
|13,058 | |||
|17,782 | |||
|37,543 | |||
|48,817 | |||
|48,016 | |||
|70,757 | |||
| | |99,290 | ||
| | |} | ||
| | |||
=== Forward === | |||
| | |||
| | ====What are the financial forecasts?==== | ||
| | {| class="wikitable" | ||
| | |+Forward financials<ref>Source: Stockhub Limited</ref><ref group="Note" name="Note04" /> | ||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
|- | |- | ||
!Year | |||
!18 !!19!!20!!21!!22 | |||
!23 | |||
!24 | |||
!25 | |||
!26 | |||
!27 | |||
!28 | |||
!29 | |||
!30 | |||
!31 | |||
!32 | |||
!33 | |||
!34 | |||
!35 | |||
!36 | |||
!37 | |||
!38 | |||
!39 | |||
!40 | |||
!41 | |||
!42 | |||
!43 | |||
!44 | |||
!45 | |||
!46 | |||
!47 | |||
!48 | |||
!49 | |||
!50 | |||
!51 | |||
!52 | |||
!53 | |||
!54 | |||
!55 | |||
!56 | |||
!57 | |||
!58 | |||
!59 | |||
|- | |- | ||
| | |'''Year end date'''||'''31/12/2022'''||'''31/12/2023'''||'''31/12/2024'''||'''31/12/2025'''||'''31/12/2026''' | ||
| | |'''31/12/2027''' | ||
| | |'''31/12/2028''' | ||
| | |'''31/12/2029''' | ||
| | |'''31/12/2030''' | ||
| | |'''31/12/2031''' | ||
| | |'''31/12/2032''' | ||
| | |'''31/12/2033''' | ||
| | |'''31/12/2034''' | ||
| | |'''31/12/2035''' | ||
| | |'''31/12/2036''' | ||
| | |'''31/12/2037''' | ||
| | |'''31/12/2038''' | ||
| | |'''31/12/2039''' | ||
| | |'''31/12/2040''' | ||
| | |'''31/12/2041''' | ||
| | |'''31/12/2042''' | ||
| | |'''31/12/2043''' | ||
| | |'''31/12/2044''' | ||
|$ | |'''31/12/2045''' | ||
|$ | |'''31/12/2046''' | ||
|$ | |'''31/12/2047''' | ||
|$ | |'''31/12/2048''' | ||
|$ | |'''31/12/2049''' | ||
|$ | |'''31/12/2050''' | ||
|$ | |'''31/12/2051''' | ||
|$ | |'''31/12/2052''' | ||
|$ | |'''31/12/2053''' | ||
|$ | |'''31/12/2054''' | ||
|$ | |'''31/12/2055''' | ||
|$ | |'''31/12/2056''' | ||
|$ | |'''31/12/2057''' | ||
|$ | |'''31/12/2058''' | ||
|$ | |'''31/12/2059''' | ||
|$ | |'''31/12/2060''' | ||
|$ | |'''31/12/2061''' | ||
|$ | |'''31/12/2062''' | ||
|$ | |'''31/12/2063''' | ||
|$ | |- | ||
|$ | | colspan="43" |<div style="text-align: center;">'''Income statement'''</div> | ||
|$ | |- | ||
|$ | |Revenues ($'million)|| $78,935||$112,257||$154,816||$207,049||$268,527 | ||
|$ | |$337,721 | ||
|$ | |$411,894 | ||
|$ | |$487,157 | ||
|$ | |$558,739 | ||
|$ | |$621,448 | ||
|$ | |$670,282 | ||
|$ | |$701,078 | ||
|$ | |$711,102 | ||
|$ | |$699,445 | ||
|$ | |$667,163 | ||
|$ | |$617,116 | ||
|$ | |$553,551 | ||
|$ | |$481,510 | ||
|$ | |$406,171 | ||
|$ | |$332,253 | ||
|$ | |$263,564 | ||
|$ | |$202,749 | ||
|$ | |$151,247 | ||
|$ | |$109,414 | ||
|$76,757 | |||
|$52,217 | |||
|$34,448 | |||
|$22,038 | |||
|$13,673 | |||
|$8,226 | |||
|$4,799 | |||
|$2,715 | |||
|$1,490 | |||
|$793 | |||
|$409 | |||
|$205 | |||
|$99 | |||
|$47 | |||
|$21 | |||
|$9 | |||
|$4 | |||
|$2 | |||
|- | |- | ||
| | |Gross profits ($'million)||$23,680||$33,677||$46,445||$62,115||$80,558 | ||
|$101,316 | |||
|$185,352 | |||
|$219,221 | |||
|$251,432 | |||
|$279,652 | |||
|$301,627 | |||
|$315,485 | |||
|$319,996 | |||
| | |$314,750 | ||
|$300,223 | |||
|$277,702 | |||
|$249,098 | |||
| | |$216,679 | ||
|$ | |$182,777 | ||
|$ | |$149,514 | ||
| | |$118,604 | ||
|$ | |$91,237 | ||
|$ | |$68,061 | ||
|$ | |$49,236 | ||
|$ | |$34,541 | ||
|$ | |$23,498 | ||
|$ | |$15,502 | ||
|$ | |$9,917 | ||
|$ | |$6,153 | ||
|$ | |$3,702 | ||
|$ | |$2,160 | ||
|$ | |$1,222 | ||
|$ | |$670 | ||
|$ | |$357 | ||
|$ | |$184 | ||
|$ | |$92 | ||
|$ | |$45 | ||
|$ | |$21 | ||
|$ | |$10 | ||
|$ | |$4 | ||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$3, | |||
|$ | |||
|$1, | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$ | |||
|$2 | |$2 | ||
|$1 | |$1 | ||
|- | |- | ||
| | |Operating profits ($'million)||$11,840||$16,839||$23,222||$31,057||$40,279 | ||
|$50,658 | |||
|$123,568 | |||
| | |$146,147 | ||
| | |$167,622 | ||
| | |$186,434 | ||
| | |$201,085 | ||
| | |$210,323 | ||
| | |$213,331 | ||
| | |$209,834 | ||
| | |$200,149 | ||
| | |$185,135 | ||
| | |$166,065 | ||
| | |$144,453 | ||
| | |$121,851 | ||
| | |$99,676 | ||
| | |$79,069 | ||
| | |$60,825 | ||
| | |$45,374 | ||
| | |$32,824 | ||
| | |$23,027 | ||
|$15,665 | |||
|$10,335 | |||
|$6,612 | |||
|$4,102 | |||
|$2,468 | |||
|$1,440 | |||
|$815 | |||
|$447 | |||
|$238 | |||
|$123 | |||
|$61 | |||
|$30 | |||
|$14 | |||
|$6 | |||
| | |$3 | ||
| | |$1 | ||
| | |$1 | ||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
|- | |- | ||
| | |Net profits ($'million)||$9,354||$13,302||$18,346||$24,535|| $31,820 | ||
| | |$40,020 | ||
| | |$97,619 | ||
| | |$115,456 | ||
| | |$132,421 | ||
| | |$147,283 | ||
| | |$158,857 | ||
| | |$166,156 | ||
| | |$168,531 | ||
| | |$165,769 | ||
| | |$158,118 | ||
| | |$146,256 | ||
| | |$131,192 | ||
| | |$114,118 | ||
| | |$96,263 | ||
| | |$78,744 | ||
| | |$62,465 | ||
| | |$48,052 | ||
| | |$35,846 | ||
| | |$25,931 | ||
| | |$18,191 | ||
|$12,376 | |||
|$8,164 | |||
|$5,223 | |||
|$3,240 | |||
|$1,949 | |||
|$1,137 | |||
|$643 | |||
|$353 | |||
|$188 | |||
|$97 | |||
|$48 | |||
|$24 | |||
|$11 | |||
|$5 | |||
|$2 | |||
|$1 | |||
| | |$0 | ||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
| | |||
|} | |} | ||
=== What are the assumptions used to estimate the financial forecasts? === | ==== What are the assumptions used to estimate the financial forecasts?==== | ||
{| class="wikitable" | {| class="wikitable" | ||
Line 1,175: | Line 924: | ||
|What's the estimated company peak market share? | |What's the estimated company peak market share? | ||
|10% | |10% | ||
| | |Stockhub estimates that especially given the leadership of the company, the peak market share of Tesla is around 10%, and, therefore, suggests using the share amount here. As of 31st December 2021, Tesla's current share of the market is estimated at around 1.8%. | ||
|- | |- | ||
|Which distribution function do you want to use to estimate company revenue? | |Which distribution function do you want to use to estimate company revenue? | ||
|Gaussian | |Gaussian | ||
|Research suggests that the revenue pattern of companies is similar to the pattern produced by the Gaussian distribution function (i.e. the revenue distribution is bell shaped)<ref>http://escml.umd.edu/Papers/ObsCPMT.pdf</ref>, so | |Research suggests that the revenue pattern of companies is similar to the pattern produced by the Gaussian distribution function (i.e. the revenue distribution is bell shaped)<ref>http://escml.umd.edu/Papers/ObsCPMT.pdf</ref>, so Stockhub suggests using that function here. | ||
|- | |- | ||
|What's the estimated standard deviation of company revenue? | |What's the estimated standard deviation of company revenue? | ||
| 6 years | | 6 years | ||
|Another way of asking this question is this way: within how many years either side of the mean does 68% of revenue occur? Based on Tesla's current revenue amount (i.e. $54 billion) and Tesla's estimated lifespan (i.e. 60 years) and Tesla's estimated current stage of its lifecycle (i.e. growth stage), the Stockhub | |Another way of asking this question is this way: within how many years either side of the mean does 68% of revenue occur? Based on Tesla's current revenue amount (i.e. $54 billion) and Tesla's estimated lifespan (i.e. 60 years) and Tesla's estimated current stage of its lifecycle (i.e. growth stage), the Stockhub company suggests using 6 years (i.e. 68% of all sales happen within 6 years either side of the mean year), so that's what's used here. | ||
|- | |- | ||
| colspan="3" |'''<div style="text-align: center;">Growth stages</div>''' | | colspan="3" |'''<div style="text-align: center;">Growth stages</div>''' | ||
Line 1,191: | Line 940: | ||
|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> | |Research suggests that a company typically goes through four distinct stages of cash flow growth.<ref>Levie J, Lichtenstein BB (2010) A terminal assessment of stages theory: Introducing a dynamic approach to entrepreneurship. Entrepreneurship: Theory & Practice 34(2): 317–350. <nowiki>https://doi.org/10.1111/j.1540-6520.2010.00377.x</nowiki></ref> Research also shows that incorporating those stages into the discounted cash flow model improves the quality of the model and, ultimately, the quality of the value estimation.<ref>Stef Hinfelaar et al.:, 2019.</ref> | ||
In addition, research shows that a key way to determine the stage which a company is in is by examining the cash flow patterns of the company.<ref>Dickinson, 2010.</ref> A summary of the economic links to cash flow patterns can be found in the appendix of this report. | 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. Note, to account for one-off events, the three-year average (median) amount was used to calculate the cash flows. | ||
On 7th February 2022, Tesla said it currently expects: to continue to generate net positive operating cash flow as it has done in the last four fiscal years; its capital expenditures to be between $5.00 to $7.00 billion in 2022 and each of the next two fiscal years; and its ability to be self-funding to continue as long as macroeconomic factors support current trends in its sales. Accordingly, based on forward looking statements, it appears that the company is in stage two of the business lifecycle (i.e. the 'growth' stage), and, therefore, it has a total of three main stages of growth remaining. | 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. | ||
Line 1,273: | Line 1,022: | ||
|Net borrowing ($000) | |Net borrowing ($000) | ||
|Zero | |Zero | ||
| | |Stockhub suggests that for simplicity, the net borrowing figure is zero. | ||
|- | |- | ||
|Interest amount ($000) | |Interest amount ($000) | ||
|Zero | |Zero | ||
| | |Stockhub suggests that for simplicity, the interest amount figure is zero. | ||
|- | |- | ||
| colspan="3" |'''<div style="text-align: center;">Growth stage 4</div>''' | | colspan="3" |'''<div style="text-align: center;">Growth stage 4</div>''' | ||
Line 1,307: | Line 1,056: | ||
|Net borrowing ($000) | |Net borrowing ($000) | ||
|Zero | |Zero | ||
| | |Stockhub suggests that for simplicity, the net borrowing figure is zero. | ||
|- | |- | ||
|Interest amount ($000) | |Interest amount ($000) | ||
|Zero | |Zero | ||
| | |Stockhub suggests that for simplicity, the interest amount figure is zero. | ||
|} | |} | ||
==Risks== | ==Risks== | ||
As with any investment, investing in Tesla carries a level of risk. | As with any investment, investing in Tesla carries a level of risk. Overall, based on the key risks highlighted below, the degree of risk associated with an investment in Tesla is high. | ||
===Risks related to the ability to grow the business=== | ===Risks related to the ability to grow the business=== | ||
Line 1,381: | Line 1,126: | ||
===What's the expected return of an investment in the company?=== | ===What's the expected return of an investment in the company?=== | ||
Stockhub estimates that the expected return of an investment in the company over the next five years is negative 24%. In other words, an £1,000 investment in the company is expected to return £760 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 negative 24%), then an investment in the company is considered to be an 'unsuitable' one. | Assuming that a suitable return level over five years is 10% per year and Tesla achieves its expected return level (of negative 24%), then an investment in the company is considered to be an 'unsuitable' one. | ||
Line 1,399: | Line 1,144: | ||
#By comparing the investment to other similar investments (i.e. relative valuation). | #By comparing the investment to other similar investments (i.e. relative valuation). | ||
Research suggests that in terms of estimating the expected return of an investment over a period of 12-months or more, the approach that is more accurate is the discounted cash flow approach<ref name=":5">Demirakos et al., 2010; Gleason et al., 2013</ref>, so that's the approach that | Research suggests that in terms of estimating the expected return of an investment over a period of 12-months or more, the approach that is more accurate is the discounted cash flow approach<ref name=":5">Demirakos et al., 2010; Gleason et al., 2013</ref>, so that's the approach that Stockhub suggests to use here; nevertheless, for completeness purposes, separately, the valuation of the company is also estimated using the using the relative valuation approach (the valuation based on the relative approach can be found in the appendix of this report). | ||
Tesla has never paid cash dividends, and on 7th February 2022, it said that it currently does not anticipate paying any cash dividends in the foreseeable future. Accordingly, | Tesla has never paid cash dividends, and on 7th February 2022, it said that it currently does not anticipate paying any cash dividends in the foreseeable future. Accordingly, Stockhub suggests using the free cash flow valuation method (rather than the dividend discount model). | ||
|- | |- | ||
|Which financial forecasts to use? | |Which financial forecasts to use? | ||
| Stockhub | | Stockhub | ||
|The only available long-term forecasts (i.e. >15 years) are the ones that are supplied by the Stockhub | |The only available long-term forecasts (i.e. >15 years) are the ones that are supplied by the Stockhub company (the forecasts can be found in the financials section of this report), so Stockhub suggests using those. | ||
|- | |- | ||
| colspan="3" |'''<div style="text-align: center;">Growth stage 2</div>''' | | colspan="3" |'''<div style="text-align: center;">Growth stage 2</div>''' | ||
Line 2,227: | Line 1,972: | ||
| Which type of multiple do you want to use? | | Which type of multiple do you want to use? | ||
| Growth-adjusted EV/sales | | Growth-adjusted EV/sales | ||
| For the numerator, | | 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? | |In regards to the growth-adjusted EV/sales multiple, for the sales figure, which year to you want to use? | ||
Line 2,443: | Line 2,188: | ||
|Cost of goods sold as a proportion of revenue (%) | |Cost of goods sold as a proportion of revenue (%) | ||
|62% | |62% | ||
| | |Stockhub suggests that to account for one-off events, it's best to take the three-year average (median) amount. | ||
|- | |- | ||
|Operating expenses as a proportion of revenue (%) | |Operating expenses as a proportion of revenue (%) | ||
|13% | |13% | ||
| | |Stockhub suggests that to account for one-off events, it's best to take the three-year average (median) amount. | ||
|- | |- | ||
|Tax rate (%) | |Tax rate (%) | ||
|14% | |14% | ||
| | |Stockhub suggests that to account for one-off events, it's best to take the three-year average (median) amount. | ||
|- | |- | ||
|Depreciation and amortisation as a proportion of revenue (%) | |Depreciation and amortisation as a proportion of revenue (%) | ||
|4% | |4% | ||
| | |Stockhub suggests that to account for one-off events, it's best to take the three-year average (median) amount. | ||
|- | |- | ||
|Fixed capital as a proportion of revenue (%) | |Fixed capital as a proportion of revenue (%) | ||
|{{#expr:trunc(11085000/365817000*100)}}% | |{{#expr:trunc(11085000/365817000*100)}}% | ||
| | |Stockhub suggests that to account for one-off events, it's best to take the three-year average (median) amount. | ||
|- | |- | ||
|Working capital as a proportion of revenue (%) | |Working capital as a proportion of revenue (%) | ||
|{{#expr:trunc((134836000-125481000)/365817000*100)}}% | |{{#expr:trunc((134836000-125481000)/365817000*100)}}% | ||
| | |Stockhub suggests that to account for one-off events, it's best to take the three-year average (median) amount. | ||
|- | |- | ||
|Net borrowing ($000) | |Net borrowing ($000) | ||
|${{formatnum:{{#expr:trunc(15613000+109106000-62639000)}}}} | |${{formatnum:{{#expr:trunc(15613000+109106000-62639000)}}}} | ||
| | |Stockhub suggests that to account for one-off events, it's best to take the three-year average (median) amount. | ||
|- | |- | ||
|Interest amount ($000) | |Interest amount ($000) | ||
|$2,645,000 | |$2,645,000 | ||
| | |Stockhub suggests that to account for one-off events, it's best to take the three-year average (median) amount. | ||
|} | |} | ||
Line 2,673: | Line 2,418: | ||
|Agriculture, Forestry and Land Use | |Agriculture, Forestry and Land Use | ||
|} | |} | ||
== Notes== | == Notes== |