Tesla Inc. DCF Valuation: Is The Stock Undervalued?

As part of a new series, each week we typically conduct a DCF on one of the companies in our screens. This week we thought we’d take a look at one of the stocks that is not currently on our screens, Tesla Inc. (TSLA).
ProfileFounded in 2003 and based in Palo Alto, California, Tesla is a vertically integrated sustainable energy company that also aims to transition the world to electric mobility by making electric vehicles. The company sells solar panels and solar roofs for energy generation plus batteries for stationary storage for residential and commercial properties including utilities. Tesla has multiple vehicles in its fleet, which include luxury and midsize sedans and crossover SUVs. The company also plans to begin selling more affordable sedans and small SUVs, a light truck, a semi truck, and a sports car. Global deliveries in 2022 were a little over 1.3 million vehicles.
Recent PerformanceOver the past twelve months, the share price is down 12.04%.TSLA data by YChartsInputs

Discount Rate: 15%

Terminal Growth Rate: 2%

WACC: 15%

Forecasted Free Cash Flows (FCFs)

Year FCF (billions) PV(billions) 2024 9.02 7.84 2025 12.83 9.70 2026 18.26 12.01 2027 25.98 14.85 2028 36.96 18.38

Terminal ValueTerminal Value = FCF * (1 + g) / (r – g) = 289.99 billionPresent Value of Terminal ValuePV of Terminal Value = Terminal Value / (1 + WACC)^5 = 144.18 billionPresent Value of Free Cash FlowsPresent Value of FCFs = ? (FCF / (1 + r)^n) = 62.78 billionEnterprise ValueEnterprise Value = Present Value of FCFs + Present Value of Terminal Value = 206.96 billionNet DebtNet Debt = Total Debt – Total Cash = -11.74 billionEquity ValueEquity Value = Enterprise Value – Net Debt = 218.70 billionPer-Share DCF ValuePer-Share DCF Value = Enterprise Value / Number of Shares Outstanding = $68.67
Conclusion

DCF Value Current Price Margin of Safety $68.67 $171.32 -149.50%

Based on the DCF valuation, the stock is overvalued. The DCF value of $68.67 per share is lower than the current market price of $171.32. The Margin of Safety is -149.50%More By This Author:Large-Cap Stocks In Trouble: Here Are The 10 Worst Performers Over The Past 12 Months10 Big-Name Stocks Near 52 Week Lows: Are They A Buy?The One Stock That Superinvestors Are Dumping: Is It Time To Sell Meta?