A Deep Analysis Of Tesla Stock 2021 (Including Intrinsic Value)

Speaker 1: Tesla, Elon Musk has built this company into one of the biggest businesses in the world. It’s also fair to say it’s the most popular stock in the entire stock market. Now, the problem with Tesla is we’re not getting deep fundamental research on the stock or we see is short term news, short term results and surface level analysis. What I want to do in this video, because I’m a massive stock nerd, is dove deep into Tesla. Stock will break each part of Tesla’s business down piece by piece and ultimately put an intrinsic value on the stock. The code Tesla’s business is their electric cars. We all know this. They have four main cars that they sell the model S, the model three, the model X in the model Y out of these the model S, the luxury sedan was the first to be produced, launched in June 2012. This car was groundbreaking at the time and it won several awards, including becoming the first electric car to top the monthly sales ranking of a country. The Moto X was next to be launched in September 2015. The midsize luxury crossover retailing import price around eighty eight thousand dollars. Then came what I call the revolutionary car for Tesla, the model three sedan. This is revolutionary because it was the car that finally made electric vehicles affordable to the everyday person. The Model three, it costs around thirty five thousand dollars. And this is where you saw Tesla rarely take off as a company that sells for model three, just shots up ever since it was released. And as of today, it is by far the most popular Starlene electric car dominating close to all of the First World Nations. Now, Tesla’s most recent car is the model. Why the electric crossover utility vehicle? And straight away, we’ve seen sales overtake both the Model X and the model Y. So it’s fair to say that the core of Tesla’s business is doing well in terms of growth. In 2020 alone, we saw almost 500000 vehicles produced and delivered something which many predicted would never happen.

But the question is, how much is this car side of their business worth? And that’s a tough one, but let’s try to answer it. So 2020, they delivered 500000 vehicles. Now, that number is not going to stay at 500000. Tesla are a high growth company. The CEO, Elon Musk, of course, he’s got an ambitious goal of selling twenty million cars by 2030. Some of you might say that’s not realistic, but he’s achieved many of the things that people said he couldn’t in the past. Now, let’s assume that the average price of the vehicle sold is around 50 K. Obviously, the model three is less. The model X is more than that. The cyber truck, of course, will also be much more than that, but on average will say fifty thousand dollars. So fifty K per vehicle times by the forecasted twenty million vehicles sold is one trillion dollars in terms of car sales revenue by 2030. And we’ll say that by 2030 they can deliver net profit margins of 10 percent per vehicle. That means in terms of profit earnings, same thing purely for their car business, they can generate a hundred billion dollars per year if we times that by the average market price to earnings ratio over time, which is fifteen, it means that the car side of their business alone could be worth one point five trillion dollars by 2030. Now, this depends on a range of forecasts and factors, but if all goes well, one point five trillion dollars purely based on car sales is possible. If all goes terribly and let’s say we see an economic collapse and people can’t afford buying new electric vehicles, while it could be a whole lot less than that at all, really depends on the economy and how Tesla can scale as a company. But based on Alan’s forecast, the intrinsic value of purely the car side of their business is worth a lot. Feel free to critique me on any of these figures if you don’t feel that they’re realistic, but they are based on Alan’s forecast. The Tesla. Yes, of course they are. More than just a car company. Key to their business is their energy segments. Elon Musk, he said that the segments, it could be bigger, but it will certainly be of a similar magnitude to their car segments. The idea behind Tesla energy is simple. On Earth, we have this massive phrase, sustainable source of energy called the sun. Let’s use our solar technology and batteries to capture this energy and store it. And Tesla do this by either installing a completely solar roof or putting solar panels on top of a completed roof. Now, just like the electric vehicles, the prices for these roofs are more than reasonable to get one of them installed. It’s a. Thirty four thousand dollars compared to a normal roof, which would cost around twenty four thousand dollars, so it cost 10K more, except you now get free energy and you’re helping the environment. And compared to other solar roofs, they’re the cheapest in all of America. OK, so why is all of this important? I think Chamar partly Hubbert’s here, CEO of Social Capital. He sums it up nicely. Here’s what he said.

Speaker 2: Where am I looking now? To be very honest with you, I think climate change is the single biggest economic opportunity of our lifetime energy, clean energy decarbonization, like, for example, in climate change. One of the most interesting things that I believed in for a while, and I’ve talked about this publicly around Tesla, is that we are going to disrupt utilities because if you can have residential solar, combined with residential storage, combined with software, that allows an individual person to very simply understand how much energy they’ve generated, understand the economic value of that energy, and then contributed back into the grid, you’re going to take a trillion dollars of power infrastructure and just incinerate it.

Speaker 1: So all of these unsustainable ways we use to get energy currently worth trillions of dollars. Tesla solar energy can change this into something clean. In doing so. I don’t think Elon Musk is wrong with saying it could be worth the same as the automotive segment. Another one point five trillion dollar potential over there. So those are the two key businesses to Tesla Automotive and Energy. There are a couple of other pieces that are often overlooked, though. First, we need to talk about Tesla’s potential ride hailing service that they want to launch. So ride hailing is just what Uber and Lyft do, right? You pay a personal driver to take you somewhere. However, the thing about Tesla’s cars is that cheaper to run their normal cars. In fact, as Kathy would said, they’re 30 percent cheaper than a Toyota Camry. So Tesla can offer a cheaper ride hailing service and a better quality one with better cars. So this can add a potential value to the company of something like Uber, over 110 billion dollars of market cap or left 18 billion. Also down the line with ride hailing, if they can be the first with self-driving cars will be absolutely nothing. And while the game will be in the bag for Tesla and I don’t know if you guys have been following this, but Elon Musk, apparently he drives to work on their test autonomous vehicle and he says he barely has to do anything already. So they seem to be well on their way to developing that technology. Also, I think Tesla Insurance deserves a mention since that will be adding at least somewhat to the value of the company when it comes to insurance. Some of you will know that risk is everything. And to determine risk, you need data. This is where Tesla’s advantage comes in. They are looking when it comes to data because every vehicle that they have sold has sensors and them that collects the data.

This gets sent directly to Tesla. So this way they know your speeds, your turning abilities, your percentage of crashing, which means they can allocate risk much more precisely. Now, I’m not saying it’s going to be as big as Buffett’s Geico, but it could generate billions of dollars for Tesla in the future. So you’ve got a potential one point five trillion dollars for automotive, one point five trillion for energy, 100 billion for ride hailing, couple of billion for insurance. Tesla could at some point be worth over three trillion dollars in terms of market cap. If you divide that into per share, that would mean over 3000 dollars per share. And that’s my bookcase for Tesla stock. After taking into these calculations. Obviously, a lot of things could go wrong, though, which would result in a much lower share price, especially if the economy crashes. I think Tesla will really struggle. But I want to finish this off by looking directly at the numbers. I’m such a finance nerd. I actually find this interesting. So there’s a couple of key things I want to point out to you. The first thing that we need to address is the current EV market. It’s just a small blip as to the size that it’s going to be in 10, 20 years. So when we look at Tesla’s revenue, this growth is likely to continue into the future. Tesla’s top line is very impressive. It’s showing the basic principle of compound growth. It’s not linear. That’s not a straight line. So 2010, a hundred and seventeen million in revenue. 2015, four billion twenty twenty thirty one point five billion 2030. It could be add that one trillion dollar mark that we made our calculations earlier on. As I say, as the basic principle of compound growth. Net income is pretty much what you can expect from an expanding business like Tesla. They spend every last cent on growing the business just like Amazon. It took them six years to finally announce a profit, but once they did, they were able to grow it into the tens of billions of dollars every year. You know, Tesla, they have had their first profitable year, but it will not be their last. So revenues growing at a compounded rate. Earnings have just come into the positives. Numbers wise. It’s showing some good signs. However, they are capable of falling ducks that I need to point out. One is that earnings per share figure that you can see there, that’s currently 64 cents a share if you compare that to the price of the stock. That is one thousand two hundred seventy five times more than the earnings. Now, obviously, the reason is because it’s price for earnings to grow. However, that always poses a big risk when there’s a large discrepancy between these two numbers.

And it’s the same with the discrepancy, with the price, the book value, the price is 35 times higher than the net assets that Tesla has on its books. So if worst comes to worst and Tesla liquidates, well, you’ll get one thirty fifth of your money back. So these are just some of the risks. Tesla, as we said, with intrinsic value based on expected growth metrics, it could be worth over three trillion dollars in terms of market cap and over 3000 dollars a share. But this is considering that Elon meets his expected goals and that the economy continues its long run. These are big ifs. And if not, while the stock’s not immune to a crash, will just say that. Nevertheless, I do wish Elon the best of luck with this company because you cannot deny the benefits that Tesla brings to this world. And we really do need a company like Tesla to succeed.

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