Most of the DCF models that I have looked at assign a lower value of Tesla/claim they are overvalued because they calculate a much higher share count as they assume high capital requirements raised by equity. This also leads to perceived higher risk so they discount with a higher rate. So dilution do matter both directly (lower eps in the future) and indirectly as it is a sign the capital requirements is higher than what can be generated by the product. For example, raising $1B at $300/share is clearly different from raising $2.5B at $180/share.
I think the expected dilution and discount rate are wrong because of how profitable the S+X line really is. It is a bit like Amazon, core business is good but they invest heavily so negative profit. For example, $10B S+X sales is reasonable to expect will lead to $2B avaliable for other investments, and that is probably low-balling it. That is why I think it is important the coming years to be able to increase production of S+X if demand is there. It would I think put a floor on the stock at close to today's levels, assuming we have a flat or rising market. Basically, if the S+X can generate $2B, the whole company is worth atleast $30B. The losses come from necessary investment with expected high returns.
Also, if we look into 2016, 2017 and 2018. I assume those years will mostly be S+X production and not Model 3. Current Model S demand is about 50k per year. if the cap is 90k annually with the current line, that puts the total capacity at 270k for those three years. They will already be -30k from the reservations of Model X. That means they have a capacity of 240k during three years for new orders (I assume few Model X will be delivered in 2015). If model S demand is flat, that means 150k could be filled with Model S, leaving only 90k to Model X for three years. SUVs are selling as much high end sedans so I think there is a good reason to believe the 90k annually won't be enough to cover demand.
I think the expected dilution and discount rate are wrong because of how profitable the S+X line really is. It is a bit like Amazon, core business is good but they invest heavily so negative profit. For example, $10B S+X sales is reasonable to expect will lead to $2B avaliable for other investments, and that is probably low-balling it. That is why I think it is important the coming years to be able to increase production of S+X if demand is there. It would I think put a floor on the stock at close to today's levels, assuming we have a flat or rising market. Basically, if the S+X can generate $2B, the whole company is worth atleast $30B. The losses come from necessary investment with expected high returns.
Also, if we look into 2016, 2017 and 2018. I assume those years will mostly be S+X production and not Model 3. Current Model S demand is about 50k per year. if the cap is 90k annually with the current line, that puts the total capacity at 270k for those three years. They will already be -30k from the reservations of Model X. That means they have a capacity of 240k during three years for new orders (I assume few Model X will be delivered in 2015). If model S demand is flat, that means 150k could be filled with Model S, leaving only 90k to Model X for three years. SUVs are selling as much high end sedans so I think there is a good reason to believe the 90k annually won't be enough to cover demand.
