Google Finance
Filing
Nov. 01, 2016
Current price : $190
Tesla is a typical growth stock. There is no much to write as from a value point. I actually find most of the writings on SeekingAlpha are not quite useful.
Good parts:
1. Innovative and disruptive in almost every aspect from manufacturing to end sales. In my opinion, if it makes gasoline cars, it still makes great cars. Maybe even easier for the company to success.
2. Tesla's car has around 30% gross margin compare to 25% from Toyota. The main saving is probably because it doesn't pay dealers.
3. Tesla's marketing expense should be much lower than others.
Risks:
1. It needs big cash investment for foreseen future.
2. It is solely relies on Elon Musk.
Valuation:
1. From value point, the company is no way a candidate. There is no profit and big negative cash flow.
2. I am trying to use a simple logic to guess its value. Because of the saving on dealer's profit and marketing, maybe manufacturing as well. Eventually its profit margin should be double the next player. The market may valuate it as 1.5-2.0 times of its sales at 2020 or later.
3. By 2018, it plans to ship 500k cars, assuming average USD$50k price, plus service revenue etc. It could be close to $30B in sales. Let assume it can't achieve that and only get $20B in revenue which might ship only 400k cars. Using 2 times price/sales ratio, given some share dilution, it can still be valued at $500/share.
4. If using more conservative estimate $30B sales at 2020, then it wouldn't worth too much than today's price.
