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Tesla

Nasdaq:TSLA
Snowflake Description

High growth potential with worrying balance sheet.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
TSLA
Nasdaq
$60B
Market Cap
  1. Automobiles
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 analysis.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?

Current Discount
Amount off the current price Tesla is available for.
Intrinsic value
6%
Share price is $351.81 vs Future cash flow value of $373.67
Current Discount Checks
For Tesla to be considered undervalued it must be available for at least 20% below the current price. Less than 40% is even better.
  • Tesla's share price is below the future cash flow value, but not at a moderate discount (< 20%).
  • Tesla's share price is below the future cash flow value, but not at a substantial discount (< 40%).
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 Avocados) 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?
  • Tesla is loss making, we can't compare it's value to the US Automobiles industry average.
  • Tesla is loss making, we can't compare the value of its earnings to the US market.
Price based on expected Growth
Does Tesla's expected growth come at a high price?
  • Tesla is loss making, we can't assess if it's growth is good value.
Price based on value of assets
What value do investors place on Tesla's assets?
  • Tesla is overvalued based on assets compared to the US 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 (-38.02%).

    Full details on the Value part of the Simply Wall St company analysis model.
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Discounted cash flow (2 Stage 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:
$2,204

Terminal Value

Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = $5,316 × (1 + 2.47%) ÷ (8.49% – 2.47%)

Terminal value based on the Perpetuity Method where growth (g) = 2.47%:
$90,429

Present value of terminal value:
$60,156

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
$62,360 = $2,204 + $60,156

Value = Total value / Shares Outstanding ($62,360 / 167)

Discount to Share Price

Value per share:
$373.67

Current discount (share price of $351.81): 5.85%



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 = 8.49% = 2.47% + (0.8 * 7.53%)



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). Note the market value of equity is used not the book value ($60,020,917,821).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

0.726 = 0.653 (1 + (1- 30%) (15.92%))

Levered Beta used in calculation = 0.8



Assumptions
  1. The risk free rate of 2.47% is from the 10 year government bond rate in USD.
  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 (7.53%) (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 24 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!
Annual Growth Rate
76.3%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is Tesla expected to grow at an attractive rate?
  • Tesla's earnings growth is expected to exceed the low risk savings rate of 3.6%.
Growth vs Market Checks
  • Tesla's earnings growth is expected to exceed the US market average.
  • Tesla's revenue growth is expected to exceed the US market average.
Annual Growth Rates Comparison
Analysts growth expectations
Super high growth metrics
High Growth Checks
  • Tesla's earnings are expected to grow significantly at over 20% yearly.
  • Tesla's revenue is expected to grow significantly at over 20% yearly.
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 occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
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
  • Performance (ROE) is expected to be above the current US Automobiles industry average.
  • An improvement in Tesla's performance (ROE) is expected over the next 3 years.
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Future performance checks
We assess Tesla's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the US market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the US market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. 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 5/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings 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.
Earnings and Revenue 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.
  • Tesla has negative negative earnings from operations, therefore its ROE is meaningless.
  • Tesla had negative or no Return on Assets (ROA) last year.
  • Return based on revenue producing assets (ROCE) is negative or zero.
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Past performance checks
We assess Tesla's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Automobiles industry? (1 check)
  3. Is the recent earnings growth over the last year 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 Net Income excluding extraordinary items 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's short term (1 year) commitments are greater than 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, assets are 0.7x debt.
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.
  • Tesla's level of debt (145% of total debt) compared to net worth is high (greater than 40%).
  • The level of debt compared to net worth has been reduced over the past 5 years (717.5% vs 145.2% today).
  • Total debt is not well covered by annual operating cash flow (less than 20% of total debt).
  • Tesla is making a loss, therefore interest on debt is not well covered by earnings.
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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 company pays interest at all)? (1 check)
  7. Tesla has a total score of 1/6, 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?
  • Not paying a dividend.
  • Not paying a dividend.
Historical and Future Dividends
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.
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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
AGE 45
TENURE AS CEO 9 years
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
  • Elon's compensation has increased whilst company is loss making.
  • Elon's compensation appears reasonable.
Management Team Tenure

Average tenure and age of the Tesla management team in years:

3.8
Average Tenure
48.7
Average Age
  • The tenure for the Tesla management team is about average.
Management Team

Elon Musk

TITLE
CEO, Product Architect
COMPENSATION
$46K
AGE
45
TENURE
9 yrs

Jeffrey Straubel

TITLE
Chief Technology Officer
COMPENSATION
$8M
AGE
41
TENURE
12.4 yrs

Jon McNeill

TITLE
President of Global Sales & Service
COMPENSATION
$6M
AGE
49
TENURE
2.2 yrs

Doug Field

TITLE
Senior Vice President of Engineering
COMPENSATION
$2M
AGE
51
TENURE
1.1 yrs

Deepak Ahuja

TITLE
Chief Financial Officer
COMPENSATION
$339K
AGE
54
TENURE
0.6 yrs

Eric Branderiz

TITLE
Chief Accounting Officer
AGE
52
TENURE
1 yrs

Gary Clark

TITLE
Chief Information Officer
TENURE
0.7 yrs

Jeff Evanson

TITLE
Vice President of Investor Relations

Todd Maron

TITLE
General Counsel

Diarmuid O'Connell

TITLE
Vice President of Business Development
Board of Directors Tenure

Average tenure and age of the Tesla board of directors in years:

7.2
Average Tenure
49.2
Average Age
  • The tenure for the Tesla board of directors is about average.
Board of Directors

Ira Ehrenpreis

TITLE
Director
COMPENSATION
$38K
AGE
48
TENURE
10.4 yrs

Elon Musk

TITLE
CEO, Product Architect
COMPENSATION
$46K
AGE
45
TENURE
13.5 yrs

Robyn Denholm

TITLE
Independent Director
COMPENSATION
$45K
AGE
54
TENURE
3.2 yrs

Antonio Gracias

TITLE
Lead Independent Director
COMPENSATION
$38K
AGE
46
TENURE
7.1 yrs

Kimbal Musk

TITLE
Director
COMPENSATION
$25K
AGE
44
TENURE
13.5 yrs

Steve Jurvetson

TITLE
Director
COMPENSATION
$28K
AGE
50
TENURE
8.3 yrs

Brad Buss

TITLE
Director
COMPENSATION
$20K
AGE
53
TENURE
7.9 yrs

Linda Rice

TITLE
Director
AGE
59
TENURE
0.3 yrs

James Murdoch

TITLE
Director
AGE
44
TENURE
0.3 yrs
Recent Insider Trading
  • Tesla insiders have only sold shares 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 0/6, 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

Map
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: $60,020,917,821
Shares outstanding: 166,887,023
Website: www.tesla.com
Address: Tesla, Inc.
3500 Deer Creek Road,
Palo Alto,
California, 94304,
United States
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
NasdaqGS TSLA Common Stock Nasdaq Global Select US USD 29. Jun 2010
DB TL0 Common Stock Deutsche Boerse AG DE EUR 29. Jun 2010
SWX TSLA Common Stock SIX Swiss Exchange CH CHF 29. Jun 2010
WBAG TSLA Common Stock Wiener Boerse AG AT EUR 29. Jun 2010
BMV TSLA * Common Stock Bolsa Mexicana de Valores MX MXN 29. Jun 2010
BOVESPA TSLA34 BDR EA REPR 1/4 COM SHS USD0.001 Bolsa de Valores de Sao Paulo BR BRL 27. Jul 2016
Number of employees
Current staff
Staff numbers
17,782
Tesla employees.
Industry
Industry: Automobile Manufacturers
Sector: Automobiles and Components