Intrinsic value of Tesla - TSLA

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$325.14

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$325.14

 
Intrinsic value

$1,936

 
Up/down potential

+496%

 
Rating

str. buy

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of TSLA stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 54.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  73.01
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  7,000
  11,200
  17,304
  25,878
  37,548
  52,975
  72,828
  97,756
  128,360
  165,168
  208,621
  259,060
  316,726
  381,761
  454,220
  534,082
  621,266
  715,647
  817,071
  925,376
  1,040,397
  1,161,985
  1,290,013
  1,424,384
  1,565,036
  1,711,949
  1,865,142
  2,024,678
  2,190,666
  2,363,256
  2,542,640
Variable operating expenses, $m
 
  11,010
  17,010
  25,438
  36,910
  52,074
  71,590
  96,094
  126,178
  162,361
  205,075
  254,656
  311,341
  375,271
  446,499
  525,003
  610,705
  703,481
  803,181
  909,644
  1,022,710
  1,142,231
  1,268,083
  1,400,169
  1,538,431
  1,682,846
  1,833,434
  1,990,259
  2,153,425
  2,323,080
  2,499,415
Fixed operating expenses, $m
 
  825
  846
  867
  889
  911
  934
  957
  981
  1,005
  1,030
  1,056
  1,083
  1,110
  1,137
  1,166
  1,195
  1,225
  1,256
  1,287
  1,319
  1,352
  1,386
  1,421
  1,456
  1,492
  1,530
  1,568
  1,607
  1,647
  1,689
Total operating expenses, $m
  7,667
  11,835
  17,856
  26,305
  37,799
  52,985
  72,524
  97,051
  127,159
  163,366
  206,105
  255,712
  312,424
  376,381
  447,636
  526,169
  611,900
  704,706
  804,437
  910,931
  1,024,029
  1,143,583
  1,269,469
  1,401,590
  1,539,887
  1,684,338
  1,834,964
  1,991,827
  2,155,032
  2,324,727
  2,501,104
Operating income, $m
  -667
  -635
  -552
  -427
  -250
  -10
  305
  705
  1,201
  1,803
  2,516
  3,348
  4,302
  5,380
  6,584
  7,914
  9,366
  10,941
  12,635
  14,444
  16,368
  18,402
  20,544
  22,794
  25,150
  27,611
  30,178
  32,852
  35,634
  38,528
  41,536
EBITDA, $m
  280
  867
  1,768
  3,042
  4,783
  7,090
  10,066
  13,808
  18,407
  23,941
  30,479
  38,072
  46,755
  56,551
  67,467
  79,501
  92,640
  106,865
  122,154
  138,480
  155,821
  174,152
  193,456
  213,716
  234,925
  257,078
  280,178
  304,236
  329,268
  355,295
  382,348
Interest expense (income), $m
  39
  209
  562
  1,074
  1,793
  2,772
  4,066
  5,732
  7,823
  10,390
  13,478
  17,123
  21,354
  26,191
  31,646
  37,725
  44,424
  51,737
  59,654
  68,162
  77,247
  86,896
  97,095
  107,834
  119,106
  130,905
  143,228
  156,079
  169,461
  183,385
  197,863
Earnings before tax, $m
  -746
  -844
  -1,114
  -1,501
  -2,044
  -2,782
  -3,762
  -5,027
  -6,622
  -8,587
  -10,962
  -13,775
  -17,052
  -20,811
  -25,062
  -29,811
  -35,057
  -40,796
  -47,019
  -53,718
  -60,879
  -68,494
  -76,551
  -85,040
  -93,956
  -103,294
  -113,051
  -123,227
  -133,827
  -144,857
  -156,326
Tax expense, $m
  27
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -675
  -844
  -1,114
  -1,501
  -2,044
  -2,782
  -3,762
  -5,027
  -6,622
  -8,587
  -10,962
  -13,775
  -17,052
  -20,811
  -25,062
  -29,811
  -35,057
  -40,796
  -47,019
  -53,718
  -60,879
  -68,494
  -76,551
  -85,040
  -93,956
  -103,294
  -113,051
  -123,227
  -133,827
  -144,857
  -156,326

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,393
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  22,664
  30,854
  47,669
  71,290
  103,438
  145,936
  200,628
  269,301
  353,609
  455,009
  574,714
  713,664
  872,523
  1,051,684
  1,251,296
  1,471,302
  1,711,477
  1,971,478
  2,250,885
  2,549,244
  2,866,107
  3,201,061
  3,553,755
  3,923,923
  4,311,395
  4,716,112
  5,138,131
  5,577,626
  6,034,893
  6,510,346
  7,004,519
Adjusted assets (=assets-cash), $m
  19,271
  30,854
  47,669
  71,290
  103,438
  145,936
  200,628
  269,301
  353,609
  455,009
  574,714
  713,664
  872,523
  1,051,684
  1,251,296
  1,471,302
  1,711,477
  1,971,478
  2,250,885
  2,549,244
  2,866,107
  3,201,061
  3,553,755
  3,923,923
  4,311,395
  4,716,112
  5,138,131
  5,577,626
  6,034,893
  6,510,346
  7,004,519
Revenue / Adjusted assets
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
Average production assets, $m
  4,881
  7,806
  12,061
  18,037
  26,171
  36,923
  50,761
  68,136
  89,467
  115,122
  145,409
  180,565
  220,758
  266,087
  316,592
  372,255
  433,023
  498,806
  569,499
  644,987
  725,157
  809,904
  899,139
  992,796
  1,090,830
  1,193,228
  1,300,004
  1,411,201
  1,526,894
  1,647,189
  1,772,220
Working capital, $m
  433
  -2,901
  -4,482
  -6,702
  -9,725
  -13,720
  -18,862
  -25,319
  -33,245
  -42,779
  -54,033
  -67,097
  -82,032
  -98,876
  -117,643
  -138,327
  -160,908
  -185,352
  -211,621
  -239,672
  -269,463
  -300,954
  -334,113
  -368,915
  -405,344
  -443,395
  -483,072
  -524,392
  -567,383
  -612,083
  -658,544
Total debt, $m
  7,128
  16,060
  30,689
  51,239
  79,208
  116,181
  163,763
  223,509
  296,857
  385,075
  489,218
  610,105
  748,312
  904,182
  1,077,844
  1,269,249
  1,478,202
  1,704,403
  1,947,487
  2,207,059
  2,482,730
  2,774,140
  3,080,984
  3,403,030
  3,740,131
  4,092,235
  4,459,391
  4,841,751
  5,239,574
  5,653,218
  6,083,148
Total liabilities, $m
  17,911
  26,843
  41,472
  62,022
  89,991
  126,964
  174,546
  234,292
  307,640
  395,858
  500,001
  620,888
  759,095
  914,965
  1,088,627
  1,280,032
  1,488,985
  1,715,186
  1,958,270
  2,217,842
  2,493,513
  2,784,923
  3,091,767
  3,413,813
  3,750,914
  4,103,018
  4,470,174
  4,852,534
  5,250,357
  5,664,001
  6,093,931
Total equity, $m
  4,753
  4,011
  6,197
  9,268
  13,447
  18,972
  26,082
  35,009
  45,969
  59,151
  74,713
  92,776
  113,428
  136,719
  162,668
  191,269
  222,492
  256,292
  292,615
  331,402
  372,594
  416,138
  461,988
  510,110
  560,481
  613,095
  667,957
  725,091
  784,536
  846,345
  910,587
Total liabilities and equity, $m
  22,664
  30,854
  47,669
  71,290
  103,438
  145,936
  200,628
  269,301
  353,609
  455,009
  574,714
  713,664
  872,523
  1,051,684
  1,251,295
  1,471,301
  1,711,477
  1,971,478
  2,250,885
  2,549,244
  2,866,107
  3,201,061
  3,553,755
  3,923,923
  4,311,395
  4,716,113
  5,138,131
  5,577,625
  6,034,893
  6,510,346
  7,004,518
Debt-to-equity ratio
  1.500
  4.000
  4.950
  5.530
  5.890
  6.120
  6.280
  6.380
  6.460
  6.510
  6.550
  6.580
  6.600
  6.610
  6.630
  6.640
  6.640
  6.650
  6.660
  6.660
  6.660
  6.670
  6.670
  6.670
  6.670
  6.670
  6.680
  6.680
  6.680
  6.680
  6.680
Adjusted equity ratio
  0.071
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -675
  -844
  -1,114
  -1,501
  -2,044
  -2,782
  -3,762
  -5,027
  -6,622
  -8,587
  -10,962
  -13,775
  -17,052
  -20,811
  -25,062
  -29,811
  -35,057
  -40,796
  -47,019
  -53,718
  -60,879
  -68,494
  -76,551
  -85,040
  -93,956
  -103,294
  -113,051
  -123,227
  -133,827
  -144,857
  -156,326
Depreciation, amort., depletion, $m
  947
  1,501
  2,319
  3,469
  5,033
  7,101
  9,762
  13,103
  17,205
  22,139
  27,963
  34,724
  42,453
  51,171
  60,883
  71,588
  83,274
  95,924
  109,519
  124,036
  139,453
  155,751
  172,911
  190,922
  209,775
  229,467
  250,001
  271,385
  293,634
  316,767
  340,812
Funds from operations, $m
  -818
  657
  1,206
  1,968
  2,989
  4,318
  6,000
  8,076
  10,584
  13,551
  17,002
  20,949
  25,401
  30,360
  35,821
  41,777
  48,216
  55,128
  62,500
  70,318
  78,574
  87,257
  96,361
  105,882
  115,819
  126,173
  136,950
  148,158
  159,806
  171,910
  184,485
Change in working capital, $m
  -694
  -1,088
  -1,581
  -2,221
  -3,022
  -3,996
  -5,142
  -6,456
  -7,926
  -9,533
  -11,254
  -13,064
  -14,935
  -16,844
  -18,767
  -20,684
  -22,581
  -24,445
  -26,269
  -28,051
  -29,791
  -31,491
  -33,159
  -34,802
  -36,429
  -38,050
  -39,677
  -41,320
  -42,991
  -44,701
  -46,461
Cash from operations, $m
  -124
  3,223
  2,787
  4,188
  6,012
  8,314
  11,142
  14,533
  18,510
  23,085
  28,256
  34,013
  40,337
  47,204
  54,588
  62,461
  70,797
  79,573
  88,769
  98,369
  108,364
  118,748
  129,520
  140,684
  152,248
  164,223
  176,627
  189,478
  202,797
  216,611
  230,946
Maintenance CAPEX, $m
  0
  -939
  -1,501
  -2,319
  -3,469
  -5,033
  -7,101
  -9,762
  -13,103
  -17,205
  -22,139
  -27,963
  -34,724
  -42,453
  -51,171
  -60,883
  -71,588
  -83,274
  -95,924
  -109,519
  -124,036
  -139,453
  -155,751
  -172,911
  -190,922
  -209,775
  -229,467
  -250,001
  -271,385
  -293,634
  -316,767
New CAPEX, $m
  -1,440
  -2,925
  -4,254
  -5,976
  -8,134
  -10,752
  -13,838
  -17,375
  -21,331
  -25,655
  -30,287
  -35,156
  -40,193
  -45,330
  -50,504
  -55,664
  -60,767
  -65,783
  -70,693
  -75,488
  -80,170
  -84,747
  -89,236
  -93,656
  -98,035
  -102,398
  -106,775
  -111,197
  -115,694
  -120,295
  -125,031
Cash from investing activities, $m
  -1,416
  -3,864
  -5,755
  -8,295
  -11,603
  -15,785
  -20,939
  -27,137
  -34,434
  -42,860
  -52,426
  -63,119
  -74,917
  -87,783
  -101,675
  -116,547
  -132,355
  -149,057
  -166,617
  -185,007
  -204,206
  -224,200
  -244,987
  -266,567
  -288,957
  -312,173
  -336,242
  -361,198
  -387,079
  -413,929
  -441,798
Free cash flow, $m
  -1,540
  -641
  -2,969
  -4,107
  -5,591
  -7,472
  -9,796
  -12,604
  -15,924
  -19,776
  -24,169
  -29,106
  -34,580
  -40,579
  -47,087
  -54,086
  -61,558
  -69,484
  -77,849
  -86,638
  -95,841
  -105,452
  -115,466
  -125,884
  -136,709
  -147,950
  -159,615
  -171,720
  -184,281
  -197,318
  -210,852
Issuance/(repayment) of debt, $m
  948
  10,082
  14,629
  20,550
  27,969
  36,973
  47,582
  59,746
  73,348
  88,218
  104,143
  120,887
  138,207
  155,870
  173,663
  191,405
  208,953
  226,201
  243,084
  259,573
  275,671
  291,410
  306,844
  322,046
  337,101
  352,104
  367,156
  382,361
  397,822
  413,645
  429,930
Issuance/(repurchase) of shares, $m
  1,866
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  3,744
  10,082
  14,629
  20,550
  27,969
  36,973
  47,582
  59,746
  73,348
  88,218
  104,143
  120,887
  138,207
  155,870
  173,663
  191,405
  208,953
  226,201
  243,084
  259,573
  275,671
  291,410
  306,844
  322,046
  337,101
  352,104
  367,156
  382,361
  397,822
  413,645
  429,930
Total cash flow (excl. dividends), $m
  2,196
  9,441
  11,660
  16,442
  22,378
  29,502
  37,786
  47,142
  57,424
  68,442
  79,973
  91,780
  103,627
  115,291
  126,576
  137,319
  147,395
  156,717
  165,235
  172,935
  179,829
  185,958
  191,378
  196,162
  200,392
  204,154
  207,541
  210,640
  213,541
  216,327
  219,078
Retained Cash Flow (-), $m
  -3,669
  -1,501
  -2,186
  -3,071
  -4,179
  -5,525
  -7,110
  -8,928
  -10,960
  -13,182
  -15,562
  -18,064
  -20,652
  -23,291
  -25,950
  -28,601
  -31,223
  -33,800
  -36,323
  -38,787
  -41,192
  -43,544
  -45,850
  -48,122
  -50,371
  -52,613
  -54,862
  -57,134
  -59,445
  -61,809
  -64,242
Prev. year cash balance distribution, $m
 
  2,243
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  10,183
  9,474
  13,372
  18,199
  23,977
  30,676
  38,214
  46,464
  55,260
  64,412
  73,717
  82,975
  92,000
  100,626
  108,718
  116,172
  122,917
  128,912
  134,148
  138,637
  142,414
  145,528
  148,040
  150,020
  151,541
  152,678
  153,506
  154,096
  154,518
  154,835
Discount rate, %
 
  6.90
  7.25
  7.61
  7.99
  8.39
  8.81
  9.25
  9.71
  10.19
  10.70
  11.24
  11.80
  12.39
  13.01
  13.66
  14.34
  15.06
  15.81
  16.61
  17.44
  18.31
  19.22
  20.18
  21.19
  22.25
  23.37
  24.53
  25.76
  27.05
  28.40
PV of cash for distribution, $m
 
  9,526
  8,237
  10,731
  13,383
  16,029
  18,487
  20,576
  22,140
  23,066
  23,298
  22,841
  21,756
  20,149
  18,156
  15,926
  13,604
  11,318
  9,173
  7,243
  5,570
  4,171
  3,041
  2,157
  1,488
  998
  650
  411
  251
  149
  86
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Tesla, Inc. designs, develops, manufactures, and sells electric vehicles and stationary energy storage products in the United States, China, Norway, and internationally. The company primarily offers sedans and sport utility vehicles. It also offers electric vehicle powertrain components and systems to other manufacturers. The company sells its products through a network of Tesla stores and galleries, as well as through Internet. In addition, it designs, manufactures, installs, monitors, maintains, leases, and sells solar energy systems to government, residential, and commercial customers; and sells 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.

FINANCIAL RATIOS  of  Tesla (TSLA)

Valuation Ratios
P/E Ratio -77.8
Price to Sales 7.5
Price to Book 11.1
Price to Tangible Book
Price to Cash Flow -423.6
Price to Free Cash Flow -33.6
Growth Rates
Sales Growth Rate 73%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -11.9%
Cap. Spend. - 3 Yr. Gr. Rate 40.4%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 125.8%
Total Debt to Equity 150%
Interest Coverage -18
Management Effectiveness
Return On Assets -4.1%
Ret/ On Assets - 3 Yr. Avg. -7.7%
Return On Total Capital -8.6%
Ret/ On T. Cap. - 3 Yr. Avg. -15.3%
Return On Equity -23.1%
Return On Equity - 3 Yr. Avg. -49.8%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 22.8%
Gross Margin - 3 Yr. Avg. 24.4%
EBITDA Margin 3.4%
EBITDA Margin - 3 Yr. Avg. -2.7%
Operating Margin -9.5%
Oper. Margin - 3 Yr. Avg. -11%
Pre-Tax Margin -10.7%
Pre-Tax Margin - 3 Yr. Avg. -13.7%
Net Profit Margin -9.6%
Net Profit Margin - 3 Yr. Avg. -13.6%
Effective Tax Rate -3.6%
Eff/ Tax Rate - 3 Yr. Avg. -2.8%
Payout Ratio 0%

TSLA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TSLA stock intrinsic value calculation we used $7000 million for the last fiscal year's total revenue generated by Tesla. The default revenue input number comes from 2016 income statement of Tesla. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our TSLA stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.9%, whose default value for TSLA is calculated based on our internal credit rating of Tesla, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Tesla.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of TSLA stock the variable cost ratio is equal to 98.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $805 million in the base year in the intrinsic value calculation for TSLA stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Tesla.

Corporate tax rate of 27% is the nominal tax rate for Tesla. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the TSLA stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for TSLA are equal to 69.7%.

Life of production assets of 5.2 years is the average useful life of capital assets used in Tesla operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for TSLA is equal to -25.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4753 million for Tesla - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 167.692 million for Tesla is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Tesla at the current share price and the inputted number of shares is $54.5 billion.


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Stock chart of TSLA Financial statements of TSLA Annual reports of TSLA
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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