Tesla, Inc. (TSLA): Our Calculation of Intrinsic Value

Core Viewpoint - Tesla, Inc. is evaluated through a DCF model, revealing a significant gap between its current market price and intrinsic value, indicating potential overvaluation based on conservative cash flow assumptions [1][6]. Company Profile - Tesla operates as a vertically integrated company in electric vehicles, energy storage, and clean technology, with revenue streams from vehicle sales, regulatory credits, energy solutions, and software upgrades [2]. - The company’s asset base includes manufacturing scale, proprietary battery technology, AI-driven autonomy, and a robust charging infrastructure [3]. DCF Analysis - Key inputs for the DCF model include a discount rate of 10%, a terminal growth rate of 3%, and a WACC of 10% [4]. - Forecasted free cash flows (FCFs) from 2025 to 2029 are projected to grow from $6.5 billion to $10.5 billion, with a total present value of FCFs calculated at $31.5 billion [4]. - The terminal value, calculated using a perpetuity growth model, is estimated at $154.5 billion, leading to a present value of the terminal value of $95.9 billion [4]. Enterprise Value Calculation - The enterprise value of Tesla is determined to be $127.4 billion, factoring in the present value of FCFs and terminal value [5]. - With a net cash position of approximately $29.4 billion, the equity value is calculated at $156.8 billion, resulting in an intrinsic value per share of approximately $42 [5]. Conclusion - The DCF value of Tesla is around $42, while the current market price is approximately $411, indicating a margin of safety of about -90% [5]. - Tesla is recognized for its strategic ambitions in transportation and energy, leveraging its technological leadership and strong balance sheet to support future growth initiatives [5][6]. - However, the current market valuation suggests that it is heavily reliant on future execution and potential growth in autonomy and energy infrastructure rather than current cash flow fundamentals [6].