The calculations below outline how an intrinsic value for Tesla is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.
See our documentation to learn about this calculation.
|Levered FCF (USD, Millions)||$-2,735.05||$-200.36||$723.86||$2,655.00||$3,835.40|
|Source||Analyst x12||Analyst x8||Analyst x7||Analyst x6||Analyst x3|
Discounted (@ 8.5%)
Present value of next 5 years cash flows:
Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)
Terminal Value = $3,835 × (1 + 2.3%) ÷ (8.47% – 2.3%)
Terminal value based on the Perpetuity Method where growth (g) = 2.3%:
Present value of terminal value:
Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
Value = Total value / Shares Outstanding ($44,953 / 164)
Value per share:
Current discount (share price of $325.14): -19%
The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.
Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
Discount rate = 8.47% = 2.33% + (0.8 * 7.67%)
The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm).
Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
0.632 = 0.561 (1 + (1- 30%) (18.1%))
Levered Beta used in calculation = 0.8
Are Tesla's annual earnings growth expected to exceed 3.4% over the next 3 years?
Mr. Elon R. Musk founded Space Exploration Technologies Corporation in June 2002 and serves as its Chief Executive Officer, Chief Rocket Designer and Chief Technology Officer. Mr. Musk is a Co-Founder of Tesla Motors, Inc. and has been its Chief Executive Officer since October 2008 and serves its Product Architect. He co-founded PayPal and served as its Chief Executive Officer from May 2000 to September 2000. Prior to PayPal in 1995, he co-founded Zip2 Corp. with investments from the New York Times Co., Knight-Ridder, MDV, Softbank and the Hearst Corp. After, he served as the Chairman, Chief Executive Officer and Chief Technology Officer since March 1999, he sold Zip2 to Compaq for the largest cash deal in Internet history. He founded X.com Corporation in March 1999, which merged with Confinity, Inc. in March 2000. He served as the Chief Executive Officer of X.com from March 1999 to December 1999. He served as the Chairman of the Board at SolarCity Corporation from July 2006 to November 21, 2016. He served as the Chairman of PayPal, Inc. and Zip2 Corp. He served as a Director of Everdream Corporation and Halcyon Molecular Inc. He has been the Chairman of the Board at Tesla Motors, Inc. since April 2004. He has been a Director of Tesla Motors, Inc. since April 2004 and PayPal, Inc. since March 1999. He serves as a Director of Space Foundation. He serves as a Director of XPRIZE Foundation, Inc. He served as a Director of Perquest Inc. He served as a Director of SolarCity Corporation from 2006 to November 21, 2016. He served as a Non Executive Director of Surrey Satellite Technology Limited. In addition, he is a trustee of the X Prize Foundation and the Musk Foundation, both of which have a strong interest in promoting renewable and environmentally friendly energy technologies. Mr. Musk holds a B.S. in Physics from the University of Pennsylvania and BS in Economics from The Wharton School of the University of Pennsylvania in 1995.
Average tenure of the Tesla management team:
Average tenure of the Tesla board of directors:
Tesla, Inc. designs, develops, manufactures, and sells electric vehicles and energy storage products in the United States, China, Norway, and internationally. The company operates in two segments, Automotive, and Energy Generation and Storage. It primarily offers sedans and sport utility vehicles. The company also provides electric vehicle powertrain components and systems to other manufacturers; and services for electric vehicles through its 135 company-owned service centers and Service Plus locations, as well as through Tesla Ranger mobile technicians. It sells its products through a network of company-owned stores and galleries, as well as through Internet. In addition, the company offers energy storage products, such as rechargeable lithium-ion battery systems for use in homes, commercial facilities, and utility sites. Further, the company designs, manufactures, installs, maintains, leases, and sells solar energy systems to residential and commercial customers through a sales organization that include specialized internal call centers, outside sales force, a channel partner network, and a customer referral program, as well as through selected Tesla stores. Additionally, it sells renewable electricity generated by solar energy systems to customers. The company was formerly known as Tesla Motors, Inc. and changed its name to Tesla, Inc. in February 2017. Tesla, Inc. was founded in 2003 and is headquartered in Palo Alto, California.
|Market Cap:||$53,407 million|
3500 Deer Creek Road, Palo Alto, 94304, United States
|Sector:||Automobiles and Components|