Yet, while Tesla Motors operates in the same industry, the company’s hefty capital outflows, shadowed by consistent annual losses and missed delivery targets (typically a recipe for a financial meltdown) is contrasted by rather exceptional stock performance since its IPO in 2010. Founded on these financial variables and levers, along with market outlook reports, analysts have been able to methodically issue valuations and investment guidance to the market. ![]() Dunn (2017) Historically, the automotive industry has been considered rather predictable due to its capital-intense requirements for heavy expenditures for manufacturing, infrastructure, as well as research and development. ![]() Yet, early in 2017 the electric car-maker’s valuation reached over $51 billion dollars briefly surpassing Ford and General Motors in market-cap to become the most valuable carmaker in the United States. Though many could argue Tesla Motors is a globally recognized brand, the company is still in the dawn days of mass-production with total output for 2016 at 84,700 units, which fails by comparison to nearly 6.7 million vehicles that Ford produced during the same time. (NASDAQ: TSLA) is a notable example in this category- a Silicon Valley “poster child” in the automotive space with a vision to advance the adoption of electric mobility across the world. In these cases, financial historical data is generally of limited value for evaluating future financial projections, thus analysts often rely on hypothetical inputs to valuate equity. ![]() In a tech start-up arena, promising companies are generally evaluated against expected future potential of their innovation and/or ability to capitalize on those expectations. Risk-adjusted equity valuation of Tesla Motors: A practical application of Monte Carlo simulation to calibrate risk and uncertainty of risk in a Discounted Cash Flow valuation - Financial equity valuation of public companies is a complex and daunting task.
0 Comments
Leave a Reply. |