[dave1619]

I've been invested in TSLA since 2012. And there's always been people saying it's "over-valued", especially the media or folks who don't believe in Tesla's mission or potential. The best thing I've found is to work the numbers a few years out and see what you come up with. Sure, each person's forecasts will be different, but I base my numbers off of company forecasts and also Tesla's track record.

2020 deliveries: 1M vehicles (according to company guidance) Average sale price per vehicle: 900k Model 3 and Model Y x ASP $42k = $37.8B. Plus 110k Model S/X x ASP $90k = $10B. Total revenue $47.8B

Gross margin = 25% (company guidance is 30%+ for Model S/X and "mid-20s" for Model 3/Y).

Gross profit = $12B

Operating expenses = $6B (note: It's difficult to predict operating expenses 3 years out, but Tesla will likely experience a lot of operating leverage as their sales will grow much faster than R&D and sales.)

EBITDA: $6B

P/E multiple: 30 (note: If targets are achieved in 2020, Tesla likely to be growing 50% year in revenue and would likely fetch a 30-40 P/E multiple.)

Market cap: $180B

# shares outstanding: 185M shares (currently 164M outstanding)

2020 stock price = $972

A few comments:

1. The above are my forecasts based on my beliefs that Tesla can reach their own forecasts of # vehicles delivered in 2020 and gross margins.

2. Each person has their own beliefs/ideas of Tesla. So, I'm not trying to convince anyone.

3. This model can be tweaked based on changes in # vehicles delivered, gross margin, or operating expenses... to name a few factors. So, it's not perfect but it gives the basics.

4. If you find someone bearish on TSLA and who thinks it's "overvalued", ask them to give you numbers like I have. Chances are they won't be able to.

5. The Model 3 will be the iPhone moment for autos. A sexy car that redefines transport and brings in high margins. This is why Tesla has potential to be the most valuable company in the world by 2025.

6. Tesla's moat grows as they execute faster than any other auto company. It's not appropriate to value TSLA based on other auto makers. It's like valuing AAPL in 2007 based off of Nokia and Blackberry.

[pdq]

You believe Tesla is going from zero Model 3's to 900k Model 3's in a 3-year timespan?

To put that into perspective, that's more annual production and sales than the Toyota Camry plus Toyota Corolla.

https://en.wikipedia.org/wiki/Toyota_Camry#Sales

https://en.wikipedia.org/wiki/Toyota_Corolla#Sales

[dave1619]

http://corporatenews.pressroom.toyota.com/releases/world+mos...

Corolla sales are above 1.2M per year.

The 900k number is Model 3 and Model Y.

[nojvek]

Current model assumes one car per person. That's because only one person can drive a car.

How many self driving Teslas could be needed to meet transportation demand for just the US. A lot more than a million.

If Tesla can actually deliver a mass produced self driving car while everyone is still figuring out how to make electric cars with good mileage then they become the next Toyota. Just like Apple became the next Nokia.

[tcoppi]

Wow, someone on the Internet that summarizes the bull case for Tesla rationally, succinctly, and with numbers to boot!

[Aron]

Looks like you might be using EBITDA wrong up there ('operating profit'). just fyi. This approach is essential but most casual investors seem to overlook it. I find it also useful to contemplate worst case and best case scenarios and orthogonal scenarios and kind of work it all together in the intuition blender. For instance, by the time your 2020 rolls around I think it will be 100% obvious that ICEs are the walking dead (who is gonna buy a new one hoping to sell it ever when 5 years down the road there's far fewer buyers?), and that autonomous ride sharing is gonna become huge, and that Tesla may not produce a lot of profit in manufacture but in software\revenue sharing, and that they may never hit high manufacture numbers at all (or may literally detach that part).

[ilyagr]

I wonder if somebody could translate from accounting-speak. What is EBITDA? Where does this PE multiple come from?

[solomatov]

EBITDA = earning before interest, tax, depreciation and amortization, i.e. how much money is left after all usual expenditures are subtracted

PE = Price / Earnings ratio, an indicator which shows how aggressively a company is priced

[benchtobedside]

EBITDA represents a company’s net earnings before subtracting expenses from interest payments, taxes, depreciation, and amortization.