TMC is an independent, primarily volunteer organization that relies on ad revenue to cover its operating costs. Please consider whitelisting TMC on your ad blocker and becoming a Supporting Member. For more info: Support TMC
Start a Discussionhttps://teslamotorsclub.com/tmc/tags/

The Real ValueAnalyst - AMA

Discussion in 'TSLA Investor Discussions' started by ValueAnalyst, Mar 5, 2017.

Tags:
  1. ValueAnalyst

    ValueAnalyst Active Member

    Joined:
    Aug 25, 2016
    Messages:
    3,793
    Location:
    World
    I am here to answer your questions on Tesla's valuation. And to protect you from the barrage of misinformation purposefully directed at you.
     

    Attached Files:

    • Funny x 1
  2. AudubonB

    AudubonB Mild-mannered Moderator Lord Vetinari*

    Joined:
    Mar 24, 2013
    Messages:
    5,500
    ¿What is Tesla's appropriate valuation?
     
  3. ValueAnalyst

    ValueAnalyst Active Member

    Joined:
    Aug 25, 2016
    Messages:
    3,793
    Location:
    World
    I currently estimate it at more than $200 billion. Enterprise Value.
     
    • Informative x 1
  4. bicycle

    bicycle New Member

    Joined:
    Jul 19, 2015
    Messages:
    4
    Location:
    Canada
    What assumptions are used in your valuation?
     
  5. ValueAnalyst

    ValueAnalyst Active Member

    Joined:
    Aug 25, 2016
    Messages:
    3,793
    Location:
    World
    My financial model takes into account over a hundred assumptions. Which one would you like to know?

    Note that this is a 10-year discounted cash flow model, and ask away!
     
  6. SteveG3

    SteveG3 Active Member

    Joined:
    Sep 21, 2012
    Messages:
    2,330
    Location:
    US
    sure, what are your revenue and margin projections (net if you have it broken out) for 1) vehicle sales, 2) energy storage, 3) solar roofs/panels, 4) Tesla network for 2020, and the final year of your model (2027?)? fwiw, I find the last 3 pretty challenging to narrow down even modestly as far as revenues.
     
  7. ValueAnalyst

    ValueAnalyst Active Member

    Joined:
    Aug 25, 2016
    Messages:
    3,793
    Location:
    World
    Thank you for your questions. For now I'll touch on this briefly and I'll dig into more detail as part of my upcoming subscription service at SeekingAlpha.

    1.a. Vehicle sales: 500,000 vehicles in 2018, and 1 million vehicles in 2020, growing to 5 million in 2025. Supply will continue to be the constrain for the foreseeable future as other car manufacturers are years behind, and definitely not as far as they say they are. I don't expect car sharing to eat into car ownership as quickly or as much as expected. I also think the announcement of additional Gigafactories was by far the key sentence in the latest investor letter, and was completely missed by analysts.

    1.b. Margin assumptions evolve as new vehicles are introduced (down when a new vehicle is introduced for a couple of quarters then back to normal as volume production achieved) but generally speaking I'm assuming 23% gross margin.

    2. I agree with Elon that storage business will grow faster than auto market, but I'm not sold on "long-term margins similar to autos" yet. Therefore I do not expect energy storage to be a massive value driver for Tesla.

    3. I believe it was necessary for them to buy SolarCity so that Tesla customers can charge their cars, but I do not expect this to be a profit driver, so assuming no value for now.

    4. I do not expect Tesla Network to be a major profit driver in the foreseeable future due to competition as well as sharing of revenues with car owners.

    I think 2, 3 and 4 are very important to Tesla's overall strategy, but I expect profits to come primarily from car and battery manufacturing. That's where their competitive advantage lies.

    I pretty much ignore the capital raise BS. UBS analyst recently put out a report saying Tesla needs to spend $8B just in US to make Superchargers as ubiquitous as gas stations. I laughed pretty hard, then continued with my chocolate ice cream.

    Generally I think this is a reasonably conservative set of assumptions vs. Elon's forecast and more optimistic than most sell-side analysts who mostly suffer from anchoring bias.
     
    • Informative x 1
    • Like x 1
  8. SteveG3

    SteveG3 Active Member

    Joined:
    Sep 21, 2012
    Messages:
    2,330
    Location:
    US
    thanks VA. my valuation is also predominately based on the vehicle sales business... as I said, I think the other 3 are far more difficult to forecast. fwiw, my assessment of fair value is $350, with next to nothing in for anything but vehicle sales and battery storage. Even thought my estimate does not include it, the Tesla Network may turn out to be a juggernaut. I've written about this in a separate thread.
     
    • Like x 2
  9. ValueAnalyst

    ValueAnalyst Active Member

    Joined:
    Aug 25, 2016
    Messages:
    3,793
    Location:
    World
    If $350 is your estimated PER SHARE fair value, I'm assuming your growth projections are much lower than mine? My fair value per share is above $1,000.
     
    • Informative x 1
  10. Jonathan Hewitt

    Jonathan Hewitt Active Member

    Joined:
    Feb 19, 2013
    Messages:
    1,329
    Location:
    Ohio
    I have similar inputs into my model. I fully agree about the Gigafactory announcement. Without additional Gigafactories being announced either end of this year or beginning of next year Tesla can not reach the large volumes in the next 5 years required to become a "major automaker." The next 5 years are vital for Tesla to cement it's lead and take market share. I was very surprised to see them already admitting they are planning additional Gigafactories but pleased as it confirmed my assumptions. My original assumption was 1 new Gigafactory announcement at the end of this year and 2 more announced in 2018. I don't know why more people haven't discussed this revelation as it's a big deal and further confirms that Tesla does not want to be a niche automaker.
     
    • Like x 4
    • Love x 1
  11. SteveG3

    SteveG3 Active Member

    Joined:
    Sep 21, 2012
    Messages:
    2,330
    Location:
    US
    I use 3 million vehicles sold for 2025. I have the share count rising to ~225 million, driven by the their employee compensation needs far more than future secondaries. I find it silly how much is made of the capital raises and added shares.

    Other reasons my numbers may be lower... I include depreciation not only for the 3GFs/2Vehicle factories needed to hit 3 million vehicles, but for an additional two sets of these they likely will have already spent capex on for the next round of growth. I'm not sure if I have this right... maybe the depreciation for those would not hit until they are up and running. I also put in expense for SuperCharger and Service Center expenses. While I think they will ultimately be paid for by revenue from owners, I'd expect Tesla has to build out expanding capacity in advance of revenue accumulated over many years from the corresponding increased number of vehicles on the road.
     
  12. ValueAnalyst

    ValueAnalyst Active Member

    Joined:
    Aug 25, 2016
    Messages:
    3,793
    Location:
    World
    You may be underestimating revenue growth and overestimating expense growth. I'm not saying this push my service, but I believe you would benefit from the subscription service I'm about to start on SeekingAlpha. I suspect that you don't have an extensive background in discounted cash flow models?
     
    • Helpful x 1
  13. ValueAnalyst

    ValueAnalyst Active Member

    Joined:
    Aug 25, 2016
    Messages:
    3,793
    Location:
    World
    I'm also here looking for feedback.

    What would you all like to see from a subscription service exclusively on Tesla on SeekingAlpha? What types of articles should I write? Is there anything specific you'd like me to explore? What should the price be?

    I'll make the final decisions, but I'm always open for feedback.
     
    • Funny x 1
  14. adiggs

    adiggs Active Member

    Joined:
    Sep 25, 2012
    Messages:
    1,846
    Location:
    Portland, OR
    For me, Seeking Alpha may be a useful site for many other companies - I no longer find it useful or helpful for Tesla. I've reached the point where even if somebody else I trust has read and describes an article on SA as being balanced, useful, helpful, etc.. - I still don't go read it.

    The direct answer to your question is that there isn't anything in a service or article on SA, subscription or otherwise, that I would find helpful. Unfortunately for you as a writer with a potentially interesting point of view, your chosen medium has been sufficiently overrun by noise generators, that I can't hear you over their noise.
     
    • Like x 9
    • Informative x 1
  15. wbrumfiel

    wbrumfiel Member

    Joined:
    Mar 20, 2013
    Messages:
    141
    Location:
    Aurora, Colorado, United States
    Couldn't have said it better. I used to read SA articles for entertainment and I can't even do that anymore. It's just a cesspool of TSLA shorts
     
  16. Navin

    Navin Member

    Joined:
    Jun 14, 2016
    Messages:
    485
    Location:
    chicago
    This is how FAKE NEWS is created
     
  17. ValueAnalyst

    ValueAnalyst Active Member

    Joined:
    Aug 25, 2016
    Messages:
    3,793
    Location:
    World
    I agree with you, and that is exactly why I am creating this service. I am long TSLA, but I want my service to discuss both bull and bear sides to valuation issues. I believe I can accomplish that better in a controlled environment such as a subscription service on SeekingAlpha, rather than the "cesspool of TSLA shorts" as one commenter nicely put it.
     
  18. TNEVol

    TNEVol Member

    Joined:
    Apr 27, 2013
    Messages:
    273
    Location:
    Brush Creek TN
    One thing I often see missed on TMC is the expected lack of profit for many years. I think I recall EM talking about 2020 but I think he will continue to invest to push the conversion to BEV and solar. Frankly I am not expecting consistent profit for many years. The GF expenditures and other R&D and CapEx are to me long term investments.
     
    • Like x 1
  19. ValueAnalyst

    ValueAnalyst Active Member

    Joined:
    Aug 25, 2016
    Messages:
    3,793
    Location:
    World
    Need to differentiate between steady-state income statement vs. growth investments to get a true understanding of profitability. GAAP doesn't do a good job with that.
     
  20. DaveT

    DaveT Searcher of green pastures

    Joined:
    Nov 15, 2012
    Messages:
    2,903
    Location:
    San Diego
    Um, who are you?
     
    • Like x 2
    • Funny x 1

Share This Page