Valuation of Tesla: The Value of the Future Expectations

Abstract

In this assignment the purpose is to calculate the theoretical value of the Tesla stock as per 31st December 2022 and compare this to the market value of the Tesla Stock. Furthermore, the assignment addresses the complications in the use of the discounted cash flow model.
In this case the assignment enlightens how a few changes in the input data can have major effect on the valuation.
Leading to the valuation process the assignment includes a range of strategic and market analyses including Porters five forces and the PESTEL analysis. To address the internal value adding procedures we have completed af Value chain analysis. For the purpose of the valuation an accounting analysis have been conducted and led to a reformulated financial statement. The reformulated financial statement has been the steppingstone for the forecasted budgeting for the forthcoming years. In the last five years Tesla have had an extraordinary growth in both sales and market share. Looking into an upcoming market of electric vehicles, Tesla is one of the main contributors to developing the market and make the first moves. With a dazzling growth in revenue with an average of 41% Tesla have grown enormous and keeps growing. Based on the accounting analysis end the forecasted budgeting the valuation has been calculated based on the DCF model. Based on this model the theoretical value of Tesla is 95,76 USD per share. This value is approximately 25% under the market valuation, however the model a fair amount of uncertainty. For the purpose of analyzing the sensitivity the WACC has been variated with .5 basis points each way and the valuation is within the range of 90 to a 100. To challenge the market value, a multiple analysis has been used to compare other similar companies regarding the P/E and the P/S ratio. From this analysis it can be concluded that Tesla is being traded for much higher multiples than the similar companies. This is an indication of Tesla being value for their expected future growth, which seems to be expected to grow a lot.