Tesla "The Car Company" is Worth $104 Per Share. Here's Why.

The 7investing Podcast

Tesla (Nasdaq: TSLA) is one of the market’s most unique battleground stocks. People either love it or they hate it, the financial media's commentary is either euphoric or miserable, and institutional price targets have ranged everywhere from $10 to $2,000.

For the past two weeks, 7investing CEO Simon Erickson has been building a very detailed discounted cash flow for Tesla. He's put all emotions (and social interaction) aside and has let the numbers do the talking -- to develop his most-likely estimate of Tesla's future revenues, operating costs, and capital expenses through the year 2040.

Furthermore, a large part of the Tesla equation lies in the optionality offered by its visionary (and yet eccentric) CEO Elon Musk. Musk has several options of where he could lead Tesla into its future, including full self-driving software subscriptions, autonomous commercial trucks, an on-demand Robotaxi network, or a thousand other AI-based projects.

Yet even with so many potential destinations, the Tesla we know today is still primarily a car company. 92% of its revenue currently comes from selling, leasing, and servicing battery-powered electric vehicles.

IN THIS PART 1 OF 2, Simon describes how he came up with an estimate of $104 per share for Tesla as a car company. The company is aggressively building Gigafactories and ramping up the production of new models, but is also constrained on pricing and by rising competition in China. Disclosure: Options are not suitable for all investors and carry significant risk. Option investors can rapidly lose the value of their investment in a short period of time and incur permanent loss by expiration date. Certain complex options strategies carry additional risk. There are additional costs associated with option strategies that call for multiple purchases and sales of options, such as spreads, straddles, among others, as compared with a single option trade.

Prior to buying or selling an option, investors must read and understand the “Characteristics and Risks of Standardized Options”, also known as the options disclosure document (ODD) which can be found at: www.theocc.com/company-information/documents-and-archives/options-disclosure-documentSupporting documentation for any claims will be furnished upon request.

If you are enrolled in our Options Order Flow Rebate Program, The exact rebate will depend on the specifics of each transaction and will be previewed for you prior to submitting each trade. This rebate will be deducted from your cost to place the trade and will be reflected on your trade confirmation. Order flow rebates are not available for non-options transactions. To learn more, see our Fee Schedule, Order Flow Rebate FAQ, and Order Flow Rebate Program Terms & Conditions.
Options can be risky and are not suitable for all investors.

See the Characteristics and Risks of Standardized Options to learn more.All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Open to the Public Investing, Inc., member FINRA & SIPC.

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