• dazzak
    02/11/2016 - 10:54
    Because so much is riding on what so few decide,once the faith in the Central Banks fail, the chances of us getting out of this diminish every second...

Tesla Plunges As Goldman Coils Around $84 Price Target

Tyler Durden's picture


What goes up appears to come down faster. Thanks, apparently, to a well-timed Goldman Sachs suggestion that the heavily-shorted (28.4% of float) electric-car maker is over-priced (whocouldanode at 303% YTD gains), the shares are down 14.5% today on massive volume (-18% from yesterday's highs) but still notably above Patrick Archambault's $84 target.


Our previous scenario analysis here suggested this was all getting a little 'frothy'...



Via Goldman Sachs,

We now value Tesla by taking the average of 3 scenarios.

  1. In the first scenario, we assume total sales of 105K (Model S: 50K units, Next Gen: 55K) and operating margins of 14.6% implying an EPS of $5.99. Layering on a 20x multiple given the growth prospects implies a value of $120 which discounted at 20% implies a stock price of $58.
  2. We then look at a bull case where we assume that TSLA will be able to get approximately 3.5% global market share in the entry lux and mid-lux category suggesting total volumes of 200K units. The 3.5% market share assumption is consistent with the typical 3-5 year share gains seen by the most successful industry players across multiple luxury sub-segments over the past decade. We assume an operating margin of 15.2% in this scenario, which is slightly better than the 15% guidance that TSLA has provided as we see TSLA benefitting from better operating leverage given higher volumes. The implied stock price in this scenario comes at $113.
  3. We also value Tesla in a mid-case where we assume volumes of 150K units and operating margins of 14.8% which is broadly the mid-point of the two scenarios. The implied price in this scenario is $83.

Finally, we take the average of these three scenarios to get our target price of $84.

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