Tesla, Inc.

Summary

• Tesla is on a mission to accelerate the world's transition to sustainable energy.

Operations

What's the mission of the company?

Tesla is a company that's on a mission to accelerate the world's transition to sustainable energy.

What's the main offerings of the company?

Model S

Model 3

Model X

Model Y

Powerwall

Valuation

Which time period to use to estimate the expected return?

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.

Which valuation approach to use?

One of the simplest ways to estimate the value a company is to use the relative valuation approach, which bases the valuation of the company on the valuation of similar companies.

Relative valuation approach

Which type of multiple to use?

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 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 the 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, rather than the EV/sales multiple.

Stockhub suggests that with sales expected 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 expected exponential growth of the business, it's best to use one at the end of the forecast period (i.e. Year 5). Stockhub also suggests that for the sales growth figure, it's best to use Year 6 to 8.

Actions

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To contact Tesla, click here.