Tesla: Even Without Model 2, The Stock Remains Undervalued

Summary:

  • Tesla, Inc.’s growth strategy shifted due to competitive pressure from Chinese EV automakers, prompting reevaluation.
  • Despite competition, Tesla maintains a notable market share compared to peers like BYD Company and Volkswagen.
  • The electric vehicle market is projected to grow significantly, offering expansion opportunities.
  • Through a discounted cash flow model, Tesla’s fair price estimate is $255.68, with a future projection of $555.55 by 2029.
  • Risks include concerns over Tesla’s luxury brand image and competition, but the outlook remains positive, supporting a strong buy recommendation.

Vision of tuned, sporty Tesla S at the charging point

MikeMareen

Thesis

In my previous article Tesla, Inc. (NASDAQ:TSLA), I explained that Tesla could achieve my target of 14.3M vehicles by 2030. This prompted a fair price of $358.89 and a future price of $766.68.

However, many reports indicated that

TABLE OF ASSUMPTIONS
(Current data)
Assumptions Part 1
Equity Market Value 544,950.00
Debt Value 5,230.00
Cost of Debt 2.98%
Tax Rate -50.03%
10y Treasury 4.345%
Beta 1.55
Market Return 10.50%
Cost of Equity 13.89%
Assumptions Part 2
CapEx 8,898.00
Capex Margin 9.19%
Net Income 14,997.00
Interest 156.00
Tax -5,001.00
D&A 4,667.00
Ebitda 14,819.00
D&A Margin 4.82%
Interest Expense Margin 0.16%
Revenue 96,773.0

Average Price (In USD) Units Sold (Thousands of cars)
2019 55.0 367.2
2020 48.0 499.0
2021 61.0 935.5
2022 58.0 1,313.86
2023 40.2 1,800.00
2024 38.0 2,421.00
2025 58.0 2,663.10
2026 58.0 2,929.41
2027 58.0 3,222.35
2028 58.0 3,544.59
2029 58.0 3,899.04
2030 58.0 4,288.95

Sales of Vehicles Service & Other Solar
2023 $72,432.0 $7,243.0 $5,112.0
2024 $91,998.0 $7,777.5 $5,464.7
2025 $154,459.8 $8,351.5 $5,841.8
2026 $169,905.8 $8,967.9 $6,244.9
2027 $186,896.4 $9,629.7 $6,675.8
2028 $205,586.0 $10,340.4 $7,136.4
2029 $226,144.6 $11,103.5 $7,628.8
85% of Revenues 8.5% of Revenues 6% of Revenues


Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in TSLA over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.


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