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Tesla

Nasdaq:TSLA
Snowflake Description

Reasonable growth potential with imperfect balance sheet.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
TSLA
Nasdaq
$53B
Market Cap
Automobile Manufacturers
Company description

Tesla, Inc. designs, develops, manufactures, and sells electric vehicles and energy storage products in the United States, China, Norway, and internationally. More info.


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3 Month History
TSLA
Industry
5yr Volatility vs Market

Value

 Is Tesla undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of Tesla to its discounted cash flow value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

How is this discounted cash flow calculated?

  • The current share price of Tesla is above its future cash flow value.
Often investors are willing to pay a premium for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avacados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for Tesla's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are Tesla's earnings available for a low price, and how does this compare to other companies in the same industry?
  • No earnings or negative earnings.
  • No earnings or negative earnings.
Price based on expected Growth
Does Tesla's expected growth come at a high price?
  • No earnings or negative earnings.
Price based on value of assets
What value do investors place on Tesla's assets?
  • Overvalued based on assets compared to the Automobiles industry average.
X
Value checks
We assess Tesla's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) (Click here or on bar chart for details of DCF calculation.)
  2. Is the PE ratio less than the market average, and/ or less than the Automobiles industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Automobiles industry average (and greater than 0)? (1 check)
  5. Tesla has a total score of 0/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (-45.77%).

    Full details on the Value part of the Simply Wall St company analysis model.
X
Discounted cash flow (Free cash flow to Equity)

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.

5 year cash flow forecast

Present value of next 5 years cash flows:
$2,348

Terminal Value

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%:
$63,963

Present value of terminal value:
$42,605

Equity 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:
$273.67

Current discount (share price of $325.14): -19%



Estimate of Discount Rate

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%)



Estimate of Bottom Up Beta

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



Assumptions
  1. The risk free rate of 2.33% is from the 10 year government bond rate in US.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (10%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is Tesla expected to perform in the next 1 to 3 years based on estimates from 20 analysts?

    The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

    Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
    3 year growth
    Earnings are expected to become positive over 3 years.
    Future Earnings growth analysis
    Is Tesla expected to grow at an attractive rate? We look at the 1 year and 3 year growth below.

    Are Tesla's annual earnings growth expected to exceed 3.4% over the next 3 years?

    • Earnings are expected to decrease over the next year.
    • Expected to become positive over 3 years.
    Past and Future Earnings per Share
    The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occured. We also show the highest and lowest estimates looking forward to see if there is a wide range.
    Analysts growth expectations
    2 year growth check
    Super high growth metrics x1.5?

    Which of the these is expected to increase by over 50% in 2 year's time?

    • Revenue
    • Cash flow
    • Tesla is expected to become profitable in 2 years.
    Performance in 3 years
    In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
    • Tesla is not expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be below 20%.

    Improvement & Relative to industry
    • Expected to be less than the Automobiles industry average.
    • An improvement in Tesla's performance (ROE) is expected over the next 3 years.
    X
    Future performance checks
    We assess Tesla's future performance by looking at:
    1. Is the growth in earnings expected to beat the low risk savings rate, plus a premium to keep pace with inflation, in 1 year and 3 years? (2 checks)
    2. Does the average analyst expect Revenue to increase by 50% or more in 2 years? (1 check)
    3. Does the average analyst expect Operating Cash Flow to increase by 50% or more in 2 years? (1 check)
    4. Does the average analyst expect Net Income (Profit) to increase by 50% or more in 2 years? (1 check)
    5. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
    Some of the above checks will fail if the company is expected to be loss making in the relevant year.
    Tesla has a total score of 4/6, see the detailed checks below.

    Note: If no +3 year data is available, +2.5 year data may be used.

    Note 2: We use GAAP per Share in all our calculations.

    Full details on the Future part of the Simply Wall St company analysis model.

    Past Performance

     How has Tesla performed over the past 5 years?

    The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
    Past earnings growth
    Below we compare Tesla's growth in the last year to its industry (Automobiles).
    Past Earnings growth analysis
    We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
    • Tesla does not currently make a profit.
    Profit History
    Tesla's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
    Performance last year
    We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
    • Negative return on shareholders funds (ROE) last year.
    • Tesla had negative or no return on assets (ROA) last year.
    • Return based on revenue producing assets (ROCE) is negative or zero.
    X
    Past performance checks
    We assess Tesla's performance over the past 5 years by checking for:
    1. Has earnings per share (EPS) increased in past 5 years? (1 check)
    2. Has the EPS growth in the last year exceeded that of the Automobiles industry? (1 check)
    3. Is the current EPS growth higher than the average annual growth over the past 5 years? (1 check)
    4. Is the Return on Equity (ROE) higher than 20%? (1 check)
    5. Is the Return on Assets (ROA) above industry average? (1 check)
    6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
    The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
    Tesla has a total score of 0/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations.

    Full details on the Past part of the Simply Wall St company analysis model.

    Health

     How is Tesla's financial health and their level of debt?

    A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

    The boxes below represent the relative size of what makes up Tesla's finances.

    The net worth of a company is the difference between its assets and liabilities.
    Net Worth
    • Tesla is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
    • Tesla's long term commitments exceed its cash and other short term assets.
    Balance sheet
    This treemap shows a more detailed breakdown of Tesla's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
    Assets
    Liabilities and shares
    The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
    • High level of stock/ inventory/ unsold assets.
    • Total debt is not covered by total short term assets.
    Historical Debt
    Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

    The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

    If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
    • The level of debt (157%) compared to net worth is high (greater 40%).
    • The level of debt compared to net worth has been reduced over the past 5 years (238% vs 157% today).
    • Total debt is not well covered by annual operating cash flow (less than 20% of total debt).
    • Company is making a loss, therefore interest on debt is not well covered by earnings.
    X
    Financial health checks
    We assess Tesla's financial health by checking for:
    1. Are short term assets greater than short term liabilities? (1 check)
    2. Are short term assets greater than long term liabilities? (1 check)
    3. Has the debt to equity ratio increased in the past 5 years? (1 check)
    4. Is the debt to equity ratio over 40%? (1 check)
    5. Is the debt covered by short term assets? (1 check)
    6. Are earnings greater than 5x the interest on debt (if comapany pays interest at all)? (1 check)
    7. Tesla has a total score of 2/6, see the detailed checks below.


    Full details on the Health part of the Simply Wall St company analysis model.

    Dividends

     What is Tesla's current dividend yield, its reliability and sustainability?

    Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
    Annual Dividend Income
    Dividend payments
    0%
    Current annual income from Tesla dividends.
    If you bought $2,000 of Tesla shares you are expected to receive $0 in your first year as a dividend.
    Dividend Amount
    Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
    • Paying below low risk savings rate. (2.25%)
    • Paying below the markets top dividend payers. (3.18%)
    Historical dividend yield
    It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

    We also check to see if the dividend has increased in the past 10 years.
    • Not paying a notable dividend.
    • Not paying a notable dividend.
    Current Payout to shareholders
    What portion of Tesla's earnings are paid to the shareholders as a dividend.
    • Not paying a notable dividend.
    Future Payout to shareholders
    • Insufficient estimate data to determine if a dividend will be paid in 3 years.
    X
    Income/ dividend checks
    We assess Tesla's dividend by checking for:
    1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
    2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
    3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
    4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
    5. How sustainable is the dividend, can Tesla afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
    6. Tesla has a total score of 0/6, see the detailed checks below.


    Full details on the Dividends part of the Simply Wall St company analysis model.

    Management

     What is the CEO of Tesla's salary, the management and board of directors tenure and is there insider trading?

    Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
    CEO
    Elon Musk, image provided by Google.
    Elon Musk
    COMPENSATION$45,936
    AGE45
    CEO Bio

    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.

    CEO Compensation
    • CEO's compensation has increased whilst company is loss making.
    • CEO's compensation appears reasonable.
    Management Team Tenure

    Average tenure of the Tesla management team:

    Management tenure
    3.8 years
    • The tenure for the Tesla management team is about average.
    Management Team

    Elon Musk

    TITLE
    Co-Founder
    COMPENSATION
    $45,936
    AGE
    45

    Jeffrey Straubel

    TITLE
    Chief Technology Officer
    COMPENSATION
    $7,927,583
    AGE
    41

    Jon McNeill

    TITLE
    President of Global Sales and Service
    COMPENSATION
    $6,464,510
    AGE
    49

    Doug Field

    TITLE
    Senior Vice President of Engineering
    COMPENSATION
    $2,420,475
    AGE
    51

    Deepak Ahuja

    TITLE
    Chief Financial Officer
    COMPENSATION
    $339,300
    AGE
    54

    Eric Branderiz

    TITLE
    Chief Accounting Officer
    AGE
    52
    Board of Directors Tenure

    Average tenure of the Tesla board of directors:

    Board tenure
    9.3 years
    • The tenure for the Tesla board of directors is about average.
    Board of Directors

    Elon Musk

    TITLE
    Co-Founder
    COMPENSATION
    $45,936
    AGE
    45

    Ira Ehrenpreis

    TITLE
    Director
    COMPENSATION
    $37,500
    AGE
    48

    Robyn Denholm

    TITLE
    Independent Director
    COMPENSATION
    $45,000
    AGE
    54

    Antonio Gracias

    TITLE
    Lead Independent Director
    COMPENSATION
    $37,500
    AGE
    46

    Kimbal Musk

    TITLE
    Director
    COMPENSATION
    $24,535
    AGE
    44

    Steve Jurvetson

    TITLE
    Director
    COMPENSATION
    $27,500
    AGE
    50
    Recent Insider Trading
    • More shares have been bought than sold by Tesla insiders in the past 3 months.
    Who owns this company?
    X
    Management checks
    We assess Tesla's management by checking for:
    1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
    2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
    3. Is the average tenure of the management team less than 2 years? (1 check)
    4. Is the average tenure of the board of directors team less than 3 years? (1 check)
    5. Tesla has a total score of 6/6, this is not included on the snowflake, see the detailed checks below.


    Note: We use the top 6 management executives and board members in our calculations.

    Note 2: Insider trading include any internal stakeholders and these transactions.

    Full details on the Management part of the Simply Wall St company analysis model.

    Company News

    Company Info

    Description

    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.

    Details
    Name:Tesla, Inc.
    Ticker:TSLA
    Exchange:NasdaqGS
    Founded:2003
    Market Cap:$53,407 million
    Website:http://www.tesla.com
    Listings
    Map

    3500 Deer Creek Road, Palo Alto, 94304, United States

    Number of employees
    Street

    Current staff
    Staff numbers
    17,782
    Tesla employees.
    Industry
    Industry:Automobile Manufacturers
    Sector:Automobiles and Components