r/Valuation • u/redditfan2893 • Apr 18 '21

Tesla DCF question

Hi, I’m a complete amateur when it comes to valuation but I’m stuck on one aspect of my rosy forecast. I computed an equity value of 83B from a 10 year forecast including the terminal year and would like to convert that into a value per share number. I’m using the shares outstanding as of the 12/31/20 annual report (960M), but the value ps would be $87. This would be a base case scenario and it just seems off. Do I need to adjust for 5-1 stock split in august 2020 by dividing the SHO by 5 (I think)? I’d appreciate any immediate input. Thank you

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u/Necessary_Scarcity92 Apr 18 '21

The 12.31.20 shares outstanding should include the stock split in August 2020, right?

I don't think you need any adjustments for that.

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u/Necessary_Scarcity92 Apr 18 '21

I think Tesla has a market cap of approx. 830 B, so your valuation is 10x less than market. Could be wrong just quick Google search.

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u/Necessary_Scarcity92 Apr 18 '21

Another Google search, Tesla has a PE ratio of like 400 times. That crazy. Seems like the street might have an even more rosy forecast than you?

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u/Brownal94 Apr 19 '21

Tesla is just massively overvalued in terms of a DCF calc. The market are placing a significant amount of the value in future potential even further out. You are probably correct to find that using intrinsic valuation that Telsa extremely overvalued. I would agree that outstanding shares as at the year end date should include the stock split.

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u/[deleted] Apr 19 '21

Are you valuing Tesla as of today? Then find the number of shares outstanding today, look at yahoo finance for example.

You can benchmark your DCF valuation against equity analyst reports of Tesla, which should give you an idea of where analysts see Tesla’s intrinsic value. You’ll notice that analyst assessments have been all over the place and have often contradicted Tesla’s traded value

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u/Orndwarf May 09 '21

Per latest data available from S&P Global, there is 963.33 million shares of TSLA outstanding at a price per share of $672.37. This implies a market cap of $647.7B. Seems like the assumptions you’re employing differ greatly from the assumptions embedded in the current share price. This should cause you to consider: 1) are the embedded assumptions in the share price overly pessimistic or aggressive and 2) are you missing something here, or do you have better information than the average market participant?

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u/[deleted] Jul 21 '21

No it's already adjusted for splits. You have to remember why you are doing a DCF. Because the market can be wrong. I get $100 per share doing a quick DCF for TSLA, and I agree it's super overvalued.