A Tesla Revisit: Story Twists and Turns with Value Consequences

If valuation is a craft, there is no better company to hone that craft on than Tesla. I have valued Tesla almost every year since 2013, and while I have been woefully wrong on occasion, I return to the scene of the crime, to do it again. I review my 2013 valuation of Tesla briefly, before looking at lessons learned in subsequent valuations (story stock in 2016, corporate teenage in 2019, trillion-dollar wonder in 2021 and back-to-earth in January 2023). I then look at what this year has brought for Tesla, both in the market (a soaring first half of 2023, followed by stumbles in the second half) as well as as news (earnings reports and news stories). I focus in on three big news stories - the price cuts, the much-debated advances in FSD and the Cybertruck, and use those stories to reframe the valuation of the company, breaking it down into four businesses (auto, energy, software and robotaxi). With pathways (optimistic, albeit plausible) pathways to success in each business, I estimate a value per share of about $180. Needless to say, you will disagree with me on almost every part of my story, but use the spreadsheet which is attached to make it your own.

[Ari-vztn]

The fact that this is free content is insane.

[dant]

Thank you Professor, I've started watching you when being back to university 10 years ago, and still keep enjoing the channel

[chrisstaneluis]

Prof. D. - Question on your Robotaxi valuation - Why didn't you treat an unknown business/industry as a separate part of the valuation process? It doesn't make sense to give a business that doesn't exist the same WACC as the rest of the business. Why didn't you split this out and consider this under a venture capital valuation model with significant start-up costs and a WACC at 2x the proven parts of the business? Thank you for posting your work to YouTube

[alexchoplin]

Thank you Professor! I'm learning so much from your materials. Thanks for providing free access to such valuable education materials.

[phalgunarao]

Thanks for sharing your valuation of Tesla one again and appreciate the candour in your assessment. One point I might want to add to the growing set of revenue streams for Tesla could be the charging networks. Not sure the impact on revenue as yet, but I do believe there is a high probability of Tesla charging standards being adopted by more auto makers and them working with Tesla to share the charging networks to drive adoption of their EVs.

[anshika]

Timestamps are as follows:

A Tesla Revisit: Story Twists and Turns with Value Consequences
Valuation as a Craft

00:01
Three Lessons about Tesla

01:40
The Importance of Tesla's Story

03:24
Tesla's Journey to a Trillion-Dollar Company

05:00
Challenges in Tesla's Valuation

06:50
Tesla's Stock Performance in 2023

08:28
Financial News About Tesla

10:11
Key News Stories Impacting Tesla

11:51
A Need for a Valuation Reset

13:35
Breaking Down Tesla into Four Businesses

15:21
Cybertruck's Impact on Tesla's Valuation

16:56
Full Self-Driving (FSD) and Its Business Potential

18:32
Robo Taxi Business and Its Implications

20:04
Debate Over Tesla's Price Cuts

21:41
Strategic vs. Tactical Implications of Price Cuts

23:16
Strategic vs. Tactical Price Cuts

24:50
Tesla's Position in the Automobile Business

26:25
The Energy Business and Tesla's Shift to Storage

28:01
Auto Software and Robo Taxi Business

29:39
The Promise of Robo Taxis and Uncertain Profitability

31:13
Potential of a Robo Taxi Company

32:48
Tesla's Revenue Projections by Business Segment

34:19
Growth Expectations and Stock Valuation

35:48
Options and Margin of Safety in Tesla Investment

37:21
Professor's Perspective on Tesla Investment

38:55

[rubensm]

thank you for sharing your knowledge professor!!!

[lucianocalia]

Thanks Professor. I believe you have given a scientific/analytical dress to the thoughts of many Tesla investors. I really appreciated your humility in revising the target price and being totally ok with it. It is a sign of exquisite intellectual honesty, open-mindedness and desire to learn even with all the prestige you already have. This is great!

[mattde]

I cannot help but love how You rip everything apart and put it back together. Yes: I really appreciate those deep dives into valuations...

[benchpress]

TLDR, stonk go up or nah?
Just kidding, thank you for this very insightful analysis professor!

[tonylizzy]

thank you! Never miss our videos, love your cyber truck theory that it might cannibalize tesla's other product .

[pauljones]

The Prof has posted!

Drop everyone and queue up the video!!!

[edutalent]

Thanks for all your sharing and effort! Appreciate!

[surani]

Great breakdown & logical but flexible numbers depending on numerous variables in Finance landscape. Thank you. Always look forward to your posts

[adhirajmukherjee]

This is more interesting than the FOMC today

[EttoreVarotto]

Professor could you please refresh the valuation of Tesla?

[jascfdrac]

I like the way you say ‘us’ as a shareholder yourself.

[davemichaels]

Thank you sir, great video unlike any I have seen

[TheGsinghg]

Hi Prof. D, thanks for this deep dive. How would you consider Tesla's competitors leapfrogging to advanced battery and AI tech. Nvidia has a self driving suite and is partnering with non-TSLA auto-companies to leapfrog them into fsd space. How can this impact the margins of tsla ass others may end up avoiding the iterations the first mover makes.

[bettingresource]

Tesla valuation video with zero mention of BYD? come on. I love your classes and some of your assessment videos but this one seems off. The main reason tesla is rapidly dropping their car prices is because of BYD. BYD has overtaken tesla in global sales recently. BYD is a big threat to tesla. China also controls over 80% over global lithium market. BYD is able to sell their cars cheap because they produce everything for their cars except tires which will not get affected by supply chains. I covered this in detail in my x account a while back in a reply to one of the tesla posts but the author of the original post deleted his post, so my reply also got deleted.