Intrinsic value of Tesla - TSLA

Previous Close

$335.45

  Intrinsic Value

$26.55

stock screener

  Rating & Target

str. sell

-92%

Previous close

$335.45

 
Intrinsic value

$26.55

 
Up/down potential

-92%

 
Rating

str. sell

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 2017), $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 55.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  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
  18,814
  29,068
  43,472
  63,075
  88,990
  122,340
  164,217
  215,627
  277,459
  350,454
  435,184
  532,054
  641,304
  763,025
  897,182
  1,043,638
  1,202,184
  1,372,563
  1,554,499
  1,747,718
  1,951,969
  2,167,038
  2,392,762
  2,629,038
  2,875,829
  3,133,171
  3,401,170
  3,680,006
  3,969,932
  4,271,273
Variable operating expenses, $m
  20,576
  31,768
  47,488
  68,883
  97,167
  133,566
  179,270
  235,380
  302,864
  382,531
  474,965
  580,690
  699,927
  832,774
  979,195
  1,139,039
  1,312,077
  1,498,030
  1,696,598
  1,907,479
  2,130,401
  2,365,129
  2,611,487
  2,869,361
  3,138,713
  3,419,578
  3,712,075
  4,016,400
  4,332,829
  4,661,715
Fixed operating expenses, $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
Total operating expenses, $m
  20,576
  31,768
  47,488
  68,883
  97,167
  133,566
  179,270
  235,380
  302,864
  382,531
  474,965
  580,690
  699,927
  832,774
  979,195
  1,139,039
  1,312,077
  1,498,030
  1,696,598
  1,907,479
  2,130,401
  2,365,129
  2,611,487
  2,869,361
  3,138,713
  3,419,578
  3,712,075
  4,016,400
  4,332,829
  4,661,715
Operating income, $m
  -1,762
  -2,699
  -4,016
  -5,808
  -8,177
  -11,225
  -15,053
  -19,753
  -25,405
  -32,078
  -39,781
  -48,636
  -58,622
  -69,749
  -82,013
  -95,400
  -109,893
  -125,468
  -142,099
  -159,761
  -178,432
  -198,092
  -218,725
  -240,324
  -262,883
  -286,407
  -310,905
  -336,394
  -362,896
  -390,442
EBITDA, $m
  1,187
  1,834
  2,743
  3,979
  5,614
  7,718
  10,360
  13,604
  17,505
  22,110
  27,455
  33,567
  40,459
  48,138
  56,602
  65,842
  75,844
  86,593
  98,071
  110,261
  123,147
  136,716
  150,956
  165,863
  181,432
  197,668
  214,576
  232,167
  250,458
  269,469
Interest expense (income), $m
  39
  557
  1,383
  2,580
  4,263
  6,553
  9,581
  13,477
  18,369
  24,375
  31,599
  40,126
  50,025
  61,341
  74,105
  88,325
  103,997
  121,107
  139,629
  159,533
  180,788
  203,361
  227,222
  252,347
  278,717
  306,320
  335,152
  365,215
  396,524
  429,099
  462,969
Earnings before tax, $m
  -2,319
  -4,082
  -6,596
  -10,071
  -14,730
  -20,806
  -28,530
  -38,122
  -49,780
  -63,676
  -79,907
  -98,660
  -119,964
  -143,854
  -170,337
  -199,398
  -231,000
  -265,097
  -301,632
  -340,549
  -381,793
  -425,314
  -471,073
  -519,041
  -569,203
  -621,559
  -676,121
  -732,918
  -791,996
  -853,412
Tax expense, $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
Net income, $m
  -2,319
  -4,082
  -6,596
  -10,071
  -14,730
  -20,806
  -28,530
  -38,122
  -49,780
  -63,676
  -79,907
  -98,660
  -119,964
  -143,854
  -170,337
  -199,398
  -231,000
  -265,097
  -301,632
  -340,549
  -381,793
  -425,314
  -471,073
  -519,041
  -569,203
  -621,559
  -676,121
  -732,918
  -791,996
  -853,412

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  45,889
  70,898
  106,028
  153,842
  217,048
  298,391
  400,528
  525,919
  676,730
  854,765
  1,061,424
  1,297,693
  1,564,156
  1,861,037
  2,188,249
  2,545,460
  2,932,156
  3,347,714
  3,791,461
  4,262,727
  4,760,900
  5,285,458
  5,836,004
  6,412,287
  7,014,218
  7,641,881
  8,295,537
  8,975,624
  9,682,761
  10,417,738
Adjusted assets (=assets-cash), $m
  45,889
  70,898
  106,028
  153,842
  217,048
  298,391
  400,528
  525,919
  676,730
  854,765
  1,061,424
  1,297,693
  1,564,156
  1,861,037
  2,188,249
  2,545,460
  2,932,156
  3,347,714
  3,791,461
  4,262,727
  4,760,900
  5,285,458
  5,836,004
  6,412,287
  7,014,218
  7,641,881
  8,295,537
  8,975,624
  9,682,761
  10,417,738
Revenue / Adjusted assets
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
Average production assets, $m
  29,068
  44,910
  67,164
  97,451
  137,489
  189,016
  253,715
  333,143
  428,675
  541,451
  672,359
  822,024
  990,815
  1,178,874
  1,386,147
  1,612,421
  1,857,374
  2,120,610
  2,401,701
  2,700,224
  3,015,792
  3,348,073
  3,696,817
  4,061,863
  4,443,157
  4,840,750
  5,254,808
  5,685,609
  6,133,545
  6,599,116
Working capital, $m
  -207
  -320
  -478
  -694
  -979
  -1,346
  -1,806
  -2,372
  -3,052
  -3,855
  -4,787
  -5,853
  -7,054
  -8,393
  -9,869
  -11,480
  -13,224
  -15,098
  -17,099
  -19,225
  -21,472
  -23,837
  -26,320
  -28,919
  -31,634
  -34,465
  -37,413
  -40,480
  -43,669
  -46,984
Total debt, $m
  25,603
  47,786
  78,947
  121,357
  177,421
  249,573
  340,168
  451,390
  585,159
  743,076
  926,383
  1,135,953
  1,372,306
  1,635,640
  1,925,877
  2,242,722
  2,585,722
  2,954,322
  3,347,925
  3,765,938
  4,207,818
  4,673,101
  5,161,435
  5,672,598
  6,206,511
  6,763,248
  7,343,041
  7,946,278
  8,573,509
  9,225,433
Total liabilities, $m
  40,703
  62,887
  94,047
  136,458
  192,522
  264,673
  355,269
  466,490
  600,260
  758,177
  941,483
  1,151,054
  1,387,407
  1,650,740
  1,940,977
  2,257,823
  2,600,822
  2,969,422
  3,363,025
  3,781,039
  4,222,918
  4,688,201
  5,176,536
  5,687,699
  6,221,612
  6,778,349
  7,358,141
  7,961,379
  8,588,609
  9,240,534
Total equity, $m
  5,185
  8,011
  11,981
  17,384
  24,526
  33,718
  45,260
  59,429
  76,471
  96,588
  119,941
  146,639
  176,750
  210,297
  247,272
  287,637
  331,334
  378,292
  428,435
  481,688
  537,982
  597,257
  659,468
  724,588
  792,607
  863,533
  937,396
  1,014,246
  1,094,152
  1,177,204
Total liabilities and equity, $m
  45,888
  70,898
  106,028
  153,842
  217,048
  298,391
  400,529
  525,919
  676,731
  854,765
  1,061,424
  1,297,693
  1,564,157
  1,861,037
  2,188,249
  2,545,460
  2,932,156
  3,347,714
  3,791,460
  4,262,727
  4,760,900
  5,285,458
  5,836,004
  6,412,287
  7,014,219
  7,641,882
  8,295,537
  8,975,625
  9,682,761
  10,417,738
Debt-to-equity ratio
  4.940
  5.960
  6.590
  6.980
  7.230
  7.400
  7.520
  7.600
  7.650
  7.690
  7.720
  7.750
  7.760
  7.780
  7.790
  7.800
  7.800
  7.810
  7.810
  7.820
  7.820
  7.820
  7.830
  7.830
  7.830
  7.830
  7.830
  7.830
  7.840
  7.840
Adjusted equity ratio
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -2,319
  -4,082
  -6,596
  -10,071
  -14,730
  -20,806
  -28,530
  -38,122
  -49,780
  -63,676
  -79,907
  -98,660
  -119,964
  -143,854
  -170,337
  -199,398
  -231,000
  -265,097
  -301,632
  -340,549
  -381,793
  -425,314
  -471,073
  -519,041
  -569,203
  -621,559
  -676,121
  -732,918
  -791,996
  -853,412
Depreciation, amort., depletion, $m
  2,949
  4,533
  6,759
  9,787
  13,791
  18,944
  25,414
  33,357
  42,910
  54,187
  67,236
  82,202
  99,081
  117,887
  138,615
  161,242
  185,737
  212,061
  240,170
  270,022
  301,579
  334,807
  369,682
  406,186
  444,316
  484,075
  525,481
  568,561
  613,355
  659,912
Funds from operations, $m
  630
  451
  162
  -284
  -939
  -1,862
  -3,117
  -4,765
  -6,870
  -9,489
  -12,671
  -16,458
  -20,882
  -25,966
  -31,722
  -38,156
  -45,263
  -53,036
  -61,462
  -70,527
  -80,213
  -90,506
  -101,391
  -112,855
  -124,888
  -137,484
  -150,640
  -164,357
  -178,641
  -193,500
Change in working capital, $m
  -78
  -113
  -158
  -216
  -285
  -367
  -461
  -566
  -680
  -803
  -932
  -1,066
  -1,202
  -1,339
  -1,476
  -1,611
  -1,744
  -1,874
  -2,001
  -2,125
  -2,247
  -2,366
  -2,483
  -2,599
  -2,715
  -2,831
  -2,948
  -3,067
  -3,189
  -3,315
Cash from operations, $m
  708
  564
  321
  -68
  -654
  -1,496
  -2,656
  -4,200
  -6,190
  -8,686
  -11,739
  -15,392
  -19,681
  -24,627
  -30,247
  -36,544
  -43,519
  -51,162
  -59,461
  -68,401
  -77,967
  -88,141
  -98,908
  -110,256
  -122,173
  -134,653
  -147,692
  -161,290
  -175,452
  -190,186
Maintenance CAPEX, $m
  -1,816
  -2,907
  -4,491
  -6,716
  -9,745
  -13,749
  -18,902
  -25,371
  -33,314
  -42,867
  -54,145
  -67,236
  -82,202
  -99,081
  -117,887
  -138,615
  -161,242
  -185,737
  -212,061
  -240,170
  -270,022
  -301,579
  -334,807
  -369,682
  -406,186
  -444,316
  -484,075
  -525,481
  -568,561
  -613,355
New CAPEX, $m
  -10,905
  -15,842
  -22,253
  -30,287
  -40,038
  -51,527
  -64,699
  -79,429
  -95,531
  -112,776
  -130,908
  -149,664
  -168,791
  -188,059
  -207,272
  -226,275
  -244,953
  -263,235
  -281,091
  -298,524
  -315,568
  -332,281
  -348,743
  -365,046
  -381,293
  -397,593
  -414,058
  -430,802
  -447,936
  -465,571
Cash from investing activities, $m
  -12,721
  -18,749
  -26,744
  -37,003
  -49,783
  -65,276
  -83,601
  -104,800
  -128,845
  -155,643
  -185,053
  -216,900
  -250,993
  -287,140
  -325,159
  -364,890
  -406,195
  -448,972
  -493,152
  -538,694
  -585,590
  -633,860
  -683,550
  -734,728
  -787,479
  -841,909
  -898,133
  -956,283
  -1,016,497
  -1,078,926
Free cash flow, $m
  -12,014
  -18,185
  -26,424
  -37,072
  -50,437
  -66,771
  -86,256
  -109,000
  -135,036
  -164,330
  -196,792
  -232,293
  -270,674
  -311,768
  -355,407
  -401,434
  -449,714
  -500,134
  -552,613
  -607,095
  -663,557
  -722,001
  -782,459
  -844,984
  -909,653
  -976,562
  -1,045,825
  -1,117,572
  -1,191,948
  -1,269,111
Issuance/(repayment) of debt, $m
  15,288
  22,183
  31,160
  42,411
  56,064
  72,151
  90,596
  111,222
  133,769
  157,917
  183,307
  209,570
  236,353
  263,333
  290,237
  316,845
  343,000
  368,600
  393,603
  418,013
  441,879
  465,283
  488,334
  511,163
  533,913
  556,737
  579,792
  603,238
  627,230
  651,924
Issuance/(repurchase) of shares, $m
  4,264
  6,908
  10,566
  15,474
  21,872
  29,998
  40,072
  52,291
  66,822
  83,794
  103,259
  125,359
  150,074
  177,401
  207,312
  239,762
  274,697
  312,055
  351,775
  393,802
  438,086
  484,589
  533,284
  584,161
  637,222
  692,485
  749,984
  809,768
  871,902
  936,464
Cash from financing (excl. dividends), $m  
  19,552
  29,091
  41,726
  57,885
  77,936
  102,149
  130,668
  163,513
  200,591
  241,711
  286,566
  334,929
  386,427
  440,734
  497,549
  556,607
  617,697
  680,655
  745,378
  811,815
  879,965
  949,872
  1,021,618
  1,095,324
  1,171,135
  1,249,222
  1,329,776
  1,413,006
  1,499,132
  1,588,388
Total cash flow (excl. dividends), $m
  7,539
  10,906
  15,303
  20,813
  27,499
  35,378
  44,411
  54,513
  65,555
  77,382
  89,774
  102,636
  115,753
  128,967
  142,143
  155,174
  167,983
  180,521
  192,766
  204,721
  216,409
  227,871
  239,160
  250,340
  261,482
  272,660
  283,951
  295,433
  307,184
  319,278
Retained Cash Flow (-), $m
  -4,264
  -6,908
  -10,566
  -15,474
  -21,872
  -29,998
  -40,072
  -52,291
  -66,822
  -83,794
  -103,259
  -125,359
  -150,074
  -177,401
  -207,312
  -239,762
  -274,697
  -312,055
  -351,775
  -393,802
  -438,086
  -484,589
  -533,284
  -584,161
  -637,222
  -692,485
  -749,984
  -809,768
  -871,902
  -936,464
Prev. year cash balance distribution, $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 flow adjustment, $m
  470
  753
  1,163
  1,739
  2,523
  3,560
  4,894
  6,569
  8,625
  11,098
  14,018
  17,407
  21,282
  25,652
  30,521
  35,887
  41,746
  48,087
  54,903
  62,180
  69,909
  78,079
  86,682
  95,710
  105,162
  115,033
  125,327
  136,047
  147,200
  158,797
Cash available for distribution, $m
  3,274
  3,998
  4,737
  5,339
  5,627
  5,380
  4,339
  2,221
  -1,267
  -6,413
  -13,486
  -22,722
  -34,321
  -48,435
  -65,170
  -84,589
  -106,714
  -131,534
  -159,010
  -189,082
  -221,677
  -256,718
  -294,125
  -333,821
  -375,740
  -419,825
  -466,032
  -514,335
  -564,718
  -617,187
Discount rate, %
  9.10
  9.56
  10.03
  10.53
  11.06
  11.61
  12.19
  12.80
  13.44
  14.12
  14.82
  15.56
  16.34
  17.16
  18.02
  18.92
  19.86
  20.86
  21.90
  23.00
  24.15
  25.35
  26.62
  27.95
  29.35
  30.82
  32.36
  33.97
  35.67
  37.46
PV of cash for distribution, $m
  3,001
  3,331
  3,556
  3,576
  3,330
  2,783
  1,939
  847
  -407
  -1,712
  -2,948
  -4,005
  -4,797
  -5,276
  -5,431
  -5,289
  -4,903
  -4,346
  -3,693
  -3,012
  -2,362
  -1,781
  -1,291
  -900
  -604
  -389
  -241
  -143
  -81
  -44
Current shareholders' claim on cash, %
  88.4
  78.0
  68.9
  61.0
  54.2
  48.3
  43.2
  38.7
  34.8
  31.3
  28.3
  25.6
  23.3
  21.1
  19.2
  17.5
  16.0
  14.6
  13.4
  12.3
  11.2
  10.3
  9.5
  8.7
  8.0
  7.3
  6.8
  6.2
  5.7
  5.3

Tesla, Inc., formerly Tesla Motors, Inc., designs, develops, manufactures and sells fully electric vehicles, and energy storage systems, as well as installs, operates and maintains solar and energy storage products. The Company operates through two segments: Automotive, and Energy generation and storage. The Automotive segment includes the design, development, manufacturing, and sales of electric vehicles. The Energy generation and storage segment includes the design, manufacture, installation, and sale or lease of stationary energy storage products and solar energy systems to residential and commercial customers, or sale of electricity generated by its solar energy systems to customers. The Company produces and distributes two fully electric vehicles, the Model S sedan and the Model X sport utility vehicle (SUV). It also offers Model 3, a sedan designed for the mass market. It develops energy storage products for use in homes, commercial facilities and utility sites.

FINANCIAL RATIOS  of  Tesla (TSLA)

Valuation Ratios
P/E Ratio -80.3
Price to Sales 7.7
Price to Book 11.4
Price to Tangible Book
Price to Cash Flow -437.1
Price to Free Cash Flow -34.7
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 $11759 million for the last fiscal year's total revenue generated by Tesla. The default revenue input number comes from 2017 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 9.1%, 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 109.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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 5.4% 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 4%.

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 154.5%.

Life of production assets of 10 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 -1.1%. 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 - $3240 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 166 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 $55.7 billion.

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COMPANY NEWS

▶ [$$] Tesla Backs Off Solar Panel Deal With Panasonic   [12:38AM  The Wall Street Journal]
▶ [$$] SEC Probes Tesla Over Model 3 Production Disclosures   [10:49PM  The Wall Street Journal]
▶ [$$] SEC Probes Tesla Over Model 3 Production Disclosures   [08:06PM  The Wall Street Journal]
▶ [$$] Tesla Backs Off Solar Panel Deal With Panasonic   [07:40PM  The Wall Street Journal]
▶ Tesla files lawsuit against Ontario government   [05:48PM  Associated Press]
▶ Elon Musk's Long History With Goldman Sachs   [05:36PM  Bloomberg Video]
▶ Closing Bell: LIVE MARKETS BLOG   [04:01PM  TheStreet.com]
▶ Elon Musks Boring Co. proposes to dig a tunnel to Dodger Stadium   [12:46PM  American City Business Journals]
▶ [$$] Nio/Tesla: Mr Blue Sky   [06:51AM  Financial Times]
▶ [$$] Elon Musk and the birth of the anti-IPO   [06:09AM  Financial Times]
▶ [$$] Tesla subpoenaed by SEC over Elon Musk tweet   [Aug-15-18 11:46PM  Financial Times]
▶ [$$] Saudi Arabia Goes High-Tech in Approach to Investing   [07:46PM  The Wall Street Journal]
▶ [$$] SEC Sends Subpoena to Tesla in Probe Over Musk Tweets   [07:45PM  The Wall Street Journal]
▶ Musk Tweet Under Scrutiny   [07:33PM  Bloomberg]
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