Tesla Discounted Cash Flow Model Example PDF

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Summary

DCF Model for Tesla, assignment from the Asset Pricing master's class...

Description

Discounted Cash Flow Analysis - Tesla (Unlevered DCF) ($ in Millions Except Per Share Data)

Tesla - DCF Assumptions & Output: Company Name: Current Share Price:

Tesla 573.00

$

Effective Tax Rate: Discount Rate (WACC): Multiple Method: TV/ EBITDA Multiple: Terminal Value: Gordon Growth Method: Baseline Terminal FCF Growth Rate: Terminal Value:

PV of Terminal Value: Sum of PV of Free Cash Flows: Implied Equity Value:

44.0 x 279,354.0

$

2.0% 19,879.3

Historical 2018

2017 $

21,461.0 82.5% $ 4,042.0 18.8% $ 1,513.0 7.0% $ 1,901.0 $ (388.0) (1.8%) $ 22.0 0.10% $ (639.0) -2.98% $ 58.0 $ (1,063.00)

Adjustments for Non-Cash Charges: Depreciation & Amortization: % Revenue: Equity-Based Compensation: % Revenue: Amortization of Intangibles % Revenue: (Gain) / Loss on PP&E Disposal: Total Non-Cash Adjustments:

1,596.0 13.6% 467.0 4.0% 40.0 0.3% 106.0 2,209.0

Changes in Working Capital: Decrease / (Increase) in Accounts Receivable: Decrease / (Increase) in Inventory: Decrease / (Increase) in Other Assets: Increase / (Decrease) in Accounts Payable: Increase in Unearned Revenue Net Change in Working Capital: % Change in Revenue: % Revenue:

$ $ $ $ $ $ $ $

$

184.000

Implied Share Price from DCF: IRR

11,759.0 68.0% 2,223.0 18.9% 475.0 4.04% 2,107.0 (1,632.0) (13.9%) (125.0) -1.06% (452.0) -3.84% 32.0 (2,241.00)

Less: Capital Expenditures: % Revenue: Levered Free Cash Flow (Cash Flow to Equity): Growth Rate:

148,819.1 3,320.5 $ 152,139.7

Diluted Shares Outstanding: $

Tesla - FCF Projections: Revenue: Revenue Growth Rate: Gross Profit Margin EBITDA Margin Depreciation & Amortization EBIT Operating Margin: Other income / expense, net % Revenue Interest expense/Income % Revenue Provisions for tax Net Income

Yes

Use Multiples Method for TV?

(16.5%) 6.5%

$

2019 $

1

2

3

4

5

Year 2

Year 3

Year 4

Year 5

31,951.4 30.0% $ 5,782.6 18.1% $ 2,875.6 9.0% 2,875.6 (1,700.6) (5.3%) $ 47.9 0.15% $ (1,004.3) (3.14%) (280.6) $ (2,376.35)

1,835.0 8.6% 749.9 3.5% 66.0 0.3% 162.0 2,812.9

2,063.0 8.4% 898.0 3.7% 44.0 0.2% 146.0 3,151.0

2,875.6 9.0% 1,184.3 3.7% 88.0 0.3% 138.0 4,285.9

(25.0) (179.0) (1,150.0) 388.0 469.0 (497.0) (10.4%) (4.2%)

(497.0) (1,023.0) (551.0) 1,723.0 406.0 58.0 0.6% 0.3%

(367.0) (429.0) (1,036.0) 682.0 801.0 (349.0) (11.2%) (1.4%)

(4,081.0) 34.7% (4,610.0) $

(2,319.0) 10.8% (511.1) $ (88.9%)

$

$ $ $ $ $ $

(1,432.0) 5.8% 595.0 (216.4%)

826.85 66%

Year 1

24,578.0 14.5% 4,069.0 16.6% 1,567.0 6.4% 1,636.0 (69.0) (0.28%) 45.0 0.18% (641.0) -2.61% 110.0 (775.00)

$

$

$

(517.2) (7.0%) (1.6%)

$

$ 29,075.8 (9.0%) $ 5,184.0 17.8% $ 2,762.2 9.5% 2,616.8 (718.3) (2.5%) $ 43.6 0.15% $ (846.0) (2.91%) (118.5) $ (1,402.13)

$ $ $

$ $

$

2,616.8 9.0% 1,077.7 3.7% 80.1 0.3% 148.7 3,923.3

$ $ $

$ $

$

3,061.7 9.0% 1,260.9 3.7% 93.7 0.3% 144.2 4,560.5

201.7 (7.0%) 0.7%

(1,917.1) (1,744.5) 6.0% 6.0% (524.7) $ 978.3 (188.2%) (286.5%)

34,018.7 17.0% 5,951.3 17.5% 3,231.8 9.5% 3,061.7 (915.5) (2.7%) 51.0 0.15% (982.1) (2.89%) (151.1) (1,695.51)

3,980.2 9.0% 1,639.1 3.7% 121.9 0.3% 143.6 5,884.8

(346.7) (7.0%) #NAME?

$

(2,041.1) 6.0% 477.2 (51.2%)

44,224.3 30.0% 7,875.1 17.8% 4,422.4 10.0% 3,980.2 (1,545.5) (3.5%) 66.3 0.15% (1,317.8) (2.98%) (255.0) (2,541.97)

(715.8) (7.0%) (1.6%)

$

$

50,857.9 15.0% $ 9,007.1 17.7% $ 5,085.8 10.0% 4,577.2 (1,467.5) (2.9%) $ 76.3 0.15% $ (1,487.8) (2.93%) (242.1) $ (2,636.86)

6 Projected Year 6 $ 58,486.6 15.0% $ 10,334.9 17.7% $ 5,848.7 10.0% 5,263.8 (1,768.5) (3.0%) $ 87.7 0.15% $ (1,714.1) (2.93%) (291.8) $ (3,103.05)

4,577.2 9.0% 1,885.0 3.7% 140.2 0.3% 145.5 6,747.9

8

9

10

Year 8

Year 9

Year 10

$

67,259.6 $ 15.0% $ 11,924.7 $ 17.7% $ 6,726.0 $ 10.0% 6,053.4 (2,108.3) (3.1%) $ 100.9 $ 0.15% $ (1,981.0) $ (2.95%) (347.9) $ (3,640.59) $

5,263.8 9.0% 2,167.8 3.7% 161.2 0.3% 144.5 7,737.2

(465.3) (7.0%) (0.9%)

(2,653.5) (3,051.5) 6.0% 6.0% (26.4) $ 594.3 (105.5%) (2349.0%)

7 Year 7

6,053.4 9.0% 2,492.9 3.7% 185.3 0.3% 144.5 8,876.2

(535.1) (7.0%) (0.9%)

$

(3,509.2) 6.0% 589.9 (0.7%)

(615.3) (7.0%) (0.9%)

$

(4,035.6) 6.0% 584.7 (0.9%)

88,950.8 $ 102,293.4 $ 279,353.9 15.0% 15.0% 15,745.3 $ 18,117.5 17.7% 17.7% 8,895.1 $ 10,229.3 10.0% 10.0% 8,005.6 9,206.4 (2,719.8) (3,139.3) (3.1%) (3.1%) 133.4 $ 153.4 0.15% 0.15% (2,612.2) $ (3,006.0) (2.94%) (2.94%) (448.8) (518.0) (4,749.78) $ (5,473.91)

6,961.4 9.0% 2,866.9 3.7% 213.2 0.3% 144.8 10,186.2

8,005.6 9.0% 3,296.9 3.7% 245.1 0.3% 144.6 11,692.2

(707.6) (7.0%) (0.9%)

$

Terminal Value

77,348.5 $ 15.0% 13,693.3 $ 17.7% 7,734.8 $ 10.0% 6,961.4 (2,331.7) (3.0%) 116.0 $ 0.15% (2,269.3) $ (2.93%) (384.7) (4,100.27) $

(4,640.9) 6.0% 737.4 26.1%

9,206.4 9.0% 3,791.5 3.7% 281.9 0.3% 144.7 13,424.4

(813.8) (7.0%) (0.9%)

$

(5,337.0) 6.0% 791.6 7.3%

(935.9) (7.0%) (0.9%)

$

(6,137.6) 6.0% 877.0 10.8%

Comment : The levered free cash flow to Equity in this model increases dramatically from negative cashflow to positive cash flow. This was driven by an aggressive outlook for 2020 revenue lines by Eq Research from CapIQ. However, the COVID 19 outbreak serves as a major impact on global manufacturing and logistics/ The rate cuts and oil price war both impacted the global trade patterns. I assum 9% growth rate for 2021. A rebound of 34% (according to Star Mountain ER) can be expected in 2022. I used 15% as a conservative growth rate for Tesla for the following 7 years of forecast. The IRR derived from the 10 year forecast is 66%. The implied share price for TESLA : 1) $826 per share if using multiple methods 2)75.6 per share if using gordon growth method. The huge difference between two methods is mainly caused by usage of WACC: the discount rate used by gordon growth method is WACC which is bigger than cost of equity. In this model, the levered free cash flow is simplified wit substracting mandatory debt payment. Technically, the cash flow is still attributed to both debt and equity investors. So we may still want to use WACC as discount rate. So, the share price is still lower t expected. The IRR for 10 year cash flow is 66% which can be recognized as a high growth rate, which is drived by an aggressive revenue growth assumption in Year 1 and Year 3....