Goldman Sachs: Valuation Model + Target Price of $61
"We derive the target multiples that we apply to our estimates from a broader comp group
consisting of high-end luxury auto manufacturers, auto technology companies, and high
growth companies that have revenue growth characteristics similar to what we expect
from Tesla over the next few years."
Sounds reasonable enough, since TSLA is a pseudo tech company and luxury auto manufacturer with high growth.
They use different metrics: EV/Sales, EV/EBITDA, P/E, and DCF models. Here are the average fair values for each:
Goldman may have set the target at that but at the same time they were the underwriting manager of the secondary offering. Plus they funded the $100 million that allowed Elon to purchase the stock at 92/share. On top of that they funded Solar City to the tune of $500 million. So the numbers game is that Goldman has a lot of money invested in green technology and they stand to profit big if Tesla keeps going. If I were you I would NOT be betting against Goldman, JP Morgan and Morgan Stanley who help with that offering too. Do a search on Tesla, Goldman and secondary to find the information.
That's kind of the point. Since they were the underwriters and have everything to gain, it would seem like they would try to give it a target price and valuation that's as high as possible to justify the current pricing. The fact that their target price is at $61 makes one wonder if the price has disconnected from reality, and who knows how long that disconnect can last.
I've seen this story before back in 2000 with the internet stocks. There's a "blind spot" where there's tremendous revenue growth, but no real earnings, and there isn't enough data yet for good inputs for valuation models get a good grasp of a clean measure. It's where I've seen the most speculative excess, and this just repeats the story we've all heard before. I think there's a lot of money to be made in these blind spots, and the way it's acting, it's holding true again. Musk will be seen as a very shrewd salesman with the ability to sell a vision, but the likelihood is that his business models will be far too capital intensive to generate enough free cash flow over time to justify the valuations the market has bestowed upon his stocks.