Valuation Analysis

This analysis presents a comprehensive valuation of Tesla, Inc. using multiple methodologies including DCF, comparable companies, and precedent transactions. The purpose is to establish a reasonable enterprise value range for investment recommendation.

Key Assumptions

• 5-year explicit forecast period with 15% CAGR for revenue
• Terminal growth rate of 3.0% based on long-term GDP expectations
• WACC of 9.5% reflecting current capital market conditions
• Exit multiple of 12.0x EV/EBITDA based on comparable mature companies

Valuation Methodologies

1. Discounted Cash Flow: $750-850 billion
2. Comparable Companies: $700-820 billion
3. Precedent Transactions: $780-900 billion
4. Implied Share Price Range: $680-810

Cost of Capital Analysis

The weighted average cost of capital (WACC) calculation reflects Tesla's current capital structure and the risk profile of its business segments. Beta of 1.35 was derived from peer group analysis.

This implies an equity risk premium of 5.5% and a pre-tax cost of debt of 4.8%. Tax shield benefits have been incorporated at the statutory corporate tax rate of 21%.

// Example of our WACC calculation approach  
function calculateWACC(equityCost, debtCost, equityWeight, debtWeight, taxRate) {  
  return (equityCost * equityWeight) + (debtCost * (1 - taxRate) * debtWeight);  
}  
  
const WACC = calculateWACC(  
  0.115,  // equity cost  
  0.048,  // debt cost  
  0.80,   // equity weight  
  0.20,   // debt weight  
  0.21    // tax rate  
);  

Sensitivity Analysis

We conducted extensive sensitivity testing on key variables:

• WACC range: 8.5% to 10.5%
• Terminal growth rate: 2.0% to 4.0%
• Terminal EBITDA multiple: 10.0x to 14.0x
• Operating margin expansion: +/- 200 basis points