What Is Tesla Worth? According To Goldman It Depends If Elon Musk Is Steve Jobs, A Maytag Repairman, Or Henry Ford

March 25, 2014 Leave a comment

What Is Tesla Worth? According To Goldman It Depends If Elon Musk Is Steve Jobs, A Maytag Repairman, Or Henry Ford
Tyler Durden on 03/18/2014 09:29 -0400
Goldman Sachs is bearish on TSLA with a $200 price target (currently trading at $236) but… provides bulls with all the hope they need to justify stock prices rising to at least $478. Laying out 5 scenarios on the company’s path to 2025, the analyst shies from his base-case and downside-risk perspective to reflect on the possibility that TSLA is truly disruptive. Depending on whether Elon Musk is Steve Jobs (iPhone projections), Henry Ford (Model T projections), or a Maytag Repairman (Consumer Durable projections), TSLA’s upside is enormous as all of our three “disruptive outcomes” imply meaningful upside to the current share price.

Of course, the probability assocoated with each of these scenarios is why Goldman’s overall target is 15% below current prices – but that won’t stop the dreamers.

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Adding rigor to the upside analysis
We quantify the option value of Tesla shares through a deep dive into the lessons learned from past disruptive technologies as well as the opportunity from stationary storage. Our new 6-month price target rises to $200.

Automotive business worth $180
If Tesla’s auto business were to be truly disruptive (to the whole auto industry, not just luxury vehicles), then there would be considerable upside.
Keying off the history of the iPhone, (adjusting for the replacement cycle) would imply 3.1mn units by 2025 and a PV of $442 per share.
The Model-T trajectory implies 3.3mn units and $478 per share;
and the volume implied by a basket of transformative durable goods (laundry appliances/dishwashers/refrigerators) gets us 1.8mn units and $329 per share.
However, this is offset by our base case (broadly unchanged from our previous forecast) and a downside case where Tesla’s present value is lower and hence we arrive at probability weighted share price of $180 for the auto business alone.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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