NYU professor on TSLA valuation

[sleepyhead]

same guy predicated about apple and fb correctly... sometime professores or outside can see the problem pretty well compare to blind sided investors

This is not true. The professor himself said that he was wrong about FB; said FB is overvalued at $38 and has gone up since then to $44+

 

[Electroman]

He doesn't come out like a hitman like JP. His measured words and analysis seemed very reasonable.

What I fail to understand is his reference to him receiving 'more than his fair share of vitriol from Tesla fans' for his first post, but I did not see anything in the comments section that substantiates his claim. Most of the comments agreed with him with a few that disagreed. Just the usual mix I would think.

 

[Cameron]

I recently read a comment somewhere saying, "If he's so good at valuing stocks, why does he still work for a living?"
Gave me a good laugh.

 

[Causalien]

Flipping numbers in stock market isn't very interesting/fulfilling.

 

[serkol]

Flipping numbers in stock market isn't very interesting/fulfilling.

Teaching others how to do this is fulfilling, right?

Ones who cannot do, teach. Ones who cannot teach how to do, teach the future teachers

 

[fastcars]

This is not true. The professor himself said that he was wrong about FB; said FB is overvalued at $38 and has gone up since then to $44+

he said FB won't be cold or hot and it proved that way... he might be wrong in predicting price point but overall prediction is spot on till date given IPO price was $38.. again time will tell he was wrong or right on FB and same of tesla.

 

[sleepyhead]

he said FB won't be cold or hot and it proved that way... he might be wrong in predicting price point but overall prediction is spot on till date given IPO price was $38.. again time will tell he was wrong or right on FB and same of tesla.

Professor said himself, "I was wrong on Facebook" on CNBC on live TV.

 

[Causalien]

Teaching others how to do this is fulfilling, right? Ones who cannot do, teach. Ones who cannot teach how to do, teach the future teachers

I think there are, in general, two types of people who teach if we are to talk about it in extremes. One who cannot do. And one who does, got extremely successful and decided to do something else. The only way to differentiate them is probably by the contents of their lectures. Teaching, brings a lot of fulfillment that a number on the screen can't bring. There are quite a few on this forum that are going down this path as we've recently learned.

 

[Lessmog]

I think there are, in general, two types of people who teach if we are to talk about it in extremes. One who cannot do. And one who does, got extremely successful and decided to do something else. The only way to differentiate them is probably by the contents of their lectures. Teaching, brings a lot of fulfillment that a number on the screen can't bring. There are quite a few on this forum that are going down this path as we've recently learned.

And thank you for that!

 

[Norbert]

His numbers are simply based on assumptions like Audi's volume with Porsche's margin, or something like that. Nothing much more thoughtful than that, as far as I heard. One could have that opinion, however I don't.

My personal assumption would be: at least twice BMW's market cap, in a number of years. (Not necessarily stopping there.) That would correspond to 4x the current share price. And I think more and more people are going to think it' s better to get in sooner rather than later.

 

[aznt1217]

His blog post was meant to start conversation on how people get valuation. I think people seriously lost their heads. I'm reading some of the comments and some offer no value and are truly asinine. Those comments of people painting themselves as Tesla bulls are a poor representation of most of the Tesla investors I have spoken to.

Damodaran is extremely highly regarded on the street. His entire point of the post is the numbers side valuation of things and he created multiple models off with various assumption scenarios. Value does not equal valuation.

 

[Norbert]

Damodaran is extremely highly regarded on the street. His entire point of the post is the numbers side valuation of things and he created multiple models off with various assumption scenarios. Value does not equal valuation.

That is not what he said in the CNBC interview. A specific number was mentioned, and he mentioned the specific underlying assumptions of that number.

If you consider that Tesla is currently more or less at the break-even point, even his number is overvalued, compared to the status quo. And his vision of the future of Tesla doesn't seem to be especially well founded, it sounds rather random.

EDIT: I just double-checked the interview: He assumes ("even with") Audi's "revenue" and Porsche's margins.

 

[uselesslogin]

Even though I own the stock and think things will turn out well I think his whole analysis is very reasonable. Then again, I never buy a stock like TSLA except that I did.

 

[Norbert]

EDIT: I just double-checked the interview: He assumes ("even with") Audi's "revenue" and Porsche's margins.

Actually I can't make sense of the add-on phrase "with Porsche's margin", since Audi's market cap, as such, is already more than 4x of what he suggests. Am I missing something?

 

[aznt1217]

Actually I can't make sense of the add-on phrase "with Porsche's margin", since Audi's market cap, as such, is already much higher.

I'm not sure where you are coming from with this point. Market cap has nothing to do with margins. He was basically saying the sales volume of Audi with Porsche margins is his optimistic view of Tesla (which should be quite flattering because this is a good balance of high margin and high sales in the auto industry). Where everything falls short is the base data he utilized which ended at Q1 2013. I already pointed this out and he acknowledged. The methodology is sound, but as I mentioned previously value of a company is = numbers valuation + expected valuation (this is the hard part) because there are too many unknown variables.

We all look at Gross Margin, but what he brings to question are all the P&L items which fall between Gross and Net. This is where many auto companies can fail even with great products. The solace we have is the Gross margin TREND and the fact that management is watching the lines between Gross and Net very carefully so they aren't in the same hole as they were in back in 2008.

Make no mistake, I think Tesla's sales and Margin potential is much higher due to inherent product advantage which is why I am investing like I am and am not taking it too much to heart like many people are.

 

[Norbert]

Is it possible that his numbers are plain wrong?

At least the CNBC interview, unless I'm misunderstanding something, gives a very wrong impression:

He suggest that with Audi's revenue, and Porsche's margins (which he says are among the highest in the industry), you would get to a market cap of $8 to $10 billion. (The $67.12 share price number seems to be based on $8 billion).

However, according to this: Audi AG (NSUG.DE) Quote| Reuters.com ,
Audi's market cap is $35 billion, and I'd understand him as implying that with Porsche's margins, it would be even higher than it is, let's say (at least) $40 billion.

That would correspond to a share price of more than $320. According to his logic, or not?

- - - Updated - - -

I'm not sure where you are coming from with this point. Market cap has nothing to do with margins.

Have you seen the CNBC interview? See my new post above.

Is Tesla really worth $67.12? - CNBC

The TSLA section starts at about 1:50.

 

[TSLAopt]

Is it possible that his numbers are plain wrong?

At least the CNBC interview, unless I'm misunderstanding something, gives a very wrong impression:

He suggest that with Audi's revenue, and Porsche's margins (which he says are among the highest in the industry), you would get to a market cap of $8 to $10 billion. (The $67.12 share price number seems to be based on $8 billion).

However, according to this: Audi AG (NSUG.DE) Quote| Reuters.com ,
Audi's market cap is $35 billion, and I'd understand him as implying that with Porsche's margins, it would be even higher, let's say (at least) $40 billion.

That would correspond to a share price of more than $320. According to his logic, or not?

i think he put into his analysis DCF modeling of assuming there will be more secondary offerings and employee options exercised between now and then...and also even if the price would be at 320 then without this dilution of shares then it shouldn't be worth 320 now according to his model...basically it should be worth something much less and appreciate with the market naturally up to 320 at the time his analysis of TSLA reaching that size actualizes (I forget if it was 8 or 10 years from now).

needless to say....I still think he's completely wrong and ignorant in his analysis. Well intentioned but just wrong and ignorant, even the nicest people in the world can be ignorant. It's like trying to put a stock price on AAPL when the iPhone came out and not even touching or demoing an iPhone yourself yet but just hearing about it from other people...who wouldn't have thought it was a fad? I don't blame him, poor guy meant well but will hurt his credibility in the long run with this and his FB call.

 

[Norbert]

and appreciate with the market naturally up to 320 at the time his analysis of TSLA reaching that size actualizes (I forget if it was 8 or 10 years from now).

I could imagine that's the background, but it's not expressed in the interview. In the interview it sounds like he says it can't even "get" there.

If he openly said he does see a possible future share price of above $320 (minus dilution), it would give a *very* different impression.

I'm sure many people buy shares long term, now, in regard to that future share price, not in regard to what any "current" valuation might be, or not be.

 

[Causalien]

I could imagine that's the background, but it's not expressed in the interview. In the interview it sounds like he says it can't even "get" there. If he openly said he does see a possible future share price of above $320 (minus dilution), it would give a *very* different impression. I'm sure many people buy shares long term, now, in regard to that future share price, not in regard to what any "current" valuation might be, or not be.

Allright, video link of the interview? I am going to go over his body languages if we are arguing about this detail.

 

[Norbert]

Allright, video link of the interview? I am going to go over his body languages if we are arguing about this detail.

I added it above:

Is Tesla really worth $67.12? - CNBC

The TSLA section starts at about 1:50.