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Tesla Motors, Inc. (TSLA) Message Board

  • cvs9yt cvs9yt Sep 21, 2013 3:00 PM Flag

    $217 Million is operating LOSSES Value only $67 at this time, Price is Absurd

    Tesla’s stock appears way too overvalued. Aswath Damodaran, a finance professor at the Stern School of Business at NYU, wrote in a September 4 blog post that even “assuming that Tesla will grow to be as large as Audi while delivering operating margins closer to Porsche’s,” he “cannot see a rationale for buying the company at today’s market price.”

    He said it seems “absurd” to put a $20 billion market value on a company with revenues of $1.33 billion and an operating loss of about $217 million over the past 12 months. “At close to 15.4 times revenues, Tesla is being valued more like a young technology company than an automobile company,” he wrote. “However, these standard metrics are also often misleading with young companies, since value should be driven not by revenues and earnings today, but by expectations for these values in the future.”

    In his opinion, it is conceivable for Tesla’s revenues to match the $100 billion or more generated by large automakers, but the revenue growth required to get to those levels would be incompatible with the high operating margins that he assumed for Tesla. What Damodaran means is that his analysis depends on Tesla manufacturing solely high-end electric vehicles with operating margins similar to the higher end of the auto industry and by manufacturing just high-end electric vehicles, the company will find it difficult to generate revenues on par with large automakers, which have a massive lineup of vehicles.

    “The ingredients that make a young, money-losing company into a valuable, mature company are no secret: small revenues have to become big revenues, operating losses have to turn to profits, there has to be enough reinvestment (but not too much) to make these changes and the risk has to subside,” Damodaran wrote. “I am assuming all of these at Tesla but my estimated value per share of $67.12 is well below the market price.”

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222.26+1.29(+0.58%)Dec 24 1:00 PMEST

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