Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe

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Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe

seekingalpha2021-08-19

Summary Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year. With its valuation currently close to the total size of the most ...

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kairen
·2021-08-19
Undervalued af
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2
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lwlow
·2021-08-19
Ok
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boonk
·2021-08-19
Depend
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1
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imsomeonelse
·2021-08-19
Over
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3
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Heng8818
·2021-08-19
Hope it giea back to 900
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1
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- Yoongs:
  ??
  2021-08-19
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Gee1
·2021-08-19
indeed over
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4
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Saven
·2021-08-19
Over
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1
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Roticanai
·2021-08-19
Like
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2
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- Heng8818:
  ok
  2021-08-19
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CM_clement
·2021-08-19
Hodl
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5
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Nelsonkhoo
·2021-08-19
Ok
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3
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Jokhang
·2021-08-19
Tesla to the moon
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6
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- Yappydappy:
  Yes pls
  2021-08-19
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ShawnKoh1
·2021-08-19
Like and comment
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- HHTan:
  comment
  2021-08-19
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- ShawnKoh1:
  cimmebt
  2021-08-19
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Tigal80
·2021-08-19
yes
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3
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- Jokhang:
  [Smile]
  2021-08-19
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IC2
·2021-08-19
Like please. Thanks.
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- cozyli:
  done
  2021-08-19
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Mich77
·2021-08-19
Please like, thanks
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- cozyli:
  done
  2021-08-19
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RChia
·2021-08-19
Like and comment
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- Mich77:
  liked
  2021-08-19
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ccwee
·2021-08-19
latest
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- RChia:
  Like
  2021-08-19
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Dem0171c
·2021-08-19
Latest
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7
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- Dac19:
  Liked
  2021-08-19
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newbiee
·2021-08-19
K
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- Winteriness:
  k
  2021-08-19
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晓MIIN
·2021-08-19
[微笑]
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Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"TSLA","symbol_name":"特斯拉","start_time":0,"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","article_id":"1165430007","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","pubTimestamp":1629344293,"sourceInfo":null,"weMediaInfo":null,"summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"TSLA":"特斯拉"},"translate_title":"特斯拉股票被高估还是被低估？预计NHTSA的调查将进一步波动","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"TSLA":0.9},"content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","kind":null,"is_publish_news":false,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":838313291,"gmtCreate":1629373383613,"gmtModify":1676530019300,"author":{"id":"3563100164937908","authorId":"3563100164937908","name":"kairen","avatar":"https://static.tigerbbs.com/a9eea2ab527271a7eb39fde522276459","vip":1,"crmLevel":4,"crmLevelSwitch":1,"authorIdStr":"3563100164937908","idStr":"3563100164937908"},"htmlText":"Undervalued af","listText":"Undervalued af","text":"Undervalued af","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/838313291","repostId":1165430007,"repostType":2,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":838971069,"gmtCreate":1629369929151,"gmtModify":1676530018124,"author":{"id":"3576209748719827","authorId":"3576209748719827","name":"lwlow","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":4,"crmLevelSwitch":0,"authorIdStr":"3576209748719827","idStr":"3576209748719827"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/838971069","repostId":1165430007,"repostType":4,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":831729479,"gmtCreate":1629351060191,"gmtModify":1676530011763,"author":{"id":"3580955744929134","authorId":"3580955744929134","name":"boonk","avatar":"https://static.tigerbbs.com/6e58310c6a80ddfbcb69e0989cda7858","vip":1,"hat":"https://static.tigerbbs.com/f84d87792f02cf78e80ee34979fd31e5","crmLevel":6,"crmLevelSwitch":1,"authorIdStr":"3580955744929134","idStr":"3580955744929134"},"htmlText":"Depend&nbsp;","listText":"Depend&nbsp;","text":"Depend","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/831729479","repostId":1165430007,"repostType":4,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":831789667,"gmtCreate":1629349112159,"gmtModify":1676530011217,"author":{"id":"3572697049328629","authorId":"3572697049328629","name":"imsomeonelse","avatar":"https://community-static.tradeup.com/news/9294e9e7f11f190688efe808098fa12b","vip":1,"crmLevel":7,"crmLevelSwitch":0,"authorIdStr":"3572697049328629","idStr":"3572697049328629"},"htmlText":"Over","listText":"Over","text":"Over","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/831789667","repostId":1165430007,"repostType":4,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? 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Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":831712719,"gmtCreate":1629348772431,"gmtModify":1676530011131,"author":{"id":"3568786704362500","authorId":"3568786704362500","name":"Heng8818","avatar":"https://static.tigerbbs.com/3764044eede2191369830316254f5b6e","vip":1,"crmLevel":5,"crmLevelSwitch":0,"authorIdStr":"3568786704362500","idStr":"3568786704362500"},"htmlText":"Hope it giea back to 900","listText":"Hope it giea back to 900","text":"Hope it giea back to 900","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/831712719","repostId":1165430007,"repostType":4,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5575881,"gmtCreate":1629349092274,"gmtModify":1663232596436,"authorId":3573282285722566,"author":{"id":3573282285722566,"idStr":"3573282285722566","authorId":3573282285722566,"name":"Yoongs","avatar":"https://static.tigerbbs.com/359041796fe61458080479cfd058165b","vip":1,"crmLevel":2,"crmLevelSwitch":1,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":831712719,"type":1,"supId":0,"prevId":0,"content":"??","text":"??","html":"??"}],"langContent":"EN"},{"id":831719827,"gmtCreate":1629348256569,"gmtModify":1676530010889,"author":{"id":"3555136548043615","authorId":"3555136548043615","name":"Gee1","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"hat":"https://static.tigerbbs.com/0a8758340a08196056f8bc1e54805193","crmLevel":5,"crmLevelSwitch":0,"authorIdStr":"3555136548043615","idStr":"3555136548043615"},"htmlText":"indeed over","listText":"indeed over","text":"indeed over","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/831719827","repostId":1165430007,"repostType":4,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":831719911,"gmtCreate":1629348210833,"gmtModify":1676530010875,"author":{"id":"3582006437853906","authorId":"3582006437853906","name":"Saven","avatar":"https://static.tigerbbs.com/dda2c1886ae16f7a5736627f4a43df53","vip":1,"crmLevel":2,"crmLevelSwitch":1,"authorIdStr":"3582006437853906","idStr":"3582006437853906"},"htmlText":"Over","listText":"Over","text":"Over","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/831719911","repostId":1165430007,"repostType":4,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":831737785,"gmtCreate":1629348049147,"gmtModify":1676530010852,"author":{"id":"3581913988119713","authorId":"3581913988119713","name":"Roticanai","avatar":"https://static.tigerbbs.com/4da10b7952b9a699e2c4703a67642740","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"3581913988119713","idStr":"3581913988119713"},"htmlText":"Like","listText":"Like","text":"Like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/831737785","repostId":1165430007,"repostType":4,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5575841,"gmtCreate":1629348780019,"gmtModify":1663232597940,"authorId":3568786704362500,"author":{"id":3568786704362500,"idStr":"3568786704362500","authorId":3568786704362500,"name":"Heng8818","avatar":"https://static.tigerbbs.com/3764044eede2191369830316254f5b6e","vip":1,"crmLevel":5,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":831737785,"type":1,"supId":0,"prevId":0,"content":"ok","text":"ok","html":"ok"}],"langContent":"EN"},{"id":831798571,"gmtCreate":1629346518093,"gmtModify":1676530010482,"author":{"id":"3575978693829354","authorId":"3575978693829354","name":"CM_clement","avatar":"https://static.tigerbbs.com/fdbebfac76fb8dfe00958a92cdb8d706","vip":1,"hat":"https://static.tigerbbs.com/0a8758340a08196056f8bc1e54805193","crmLevel":5,"crmLevelSwitch":0,"authorIdStr":"3575978693829354","idStr":"3575978693829354"},"htmlText":"Hodl","listText":"Hodl","text":"Hodl","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/831798571","repostId":1165430007,"repostType":4,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":831707852,"gmtCreate":1629346134076,"gmtModify":1676530010365,"author":{"id":"3574064552756113","authorId":"3574064552756113","name":"Nelsonkhoo","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":7,"crmLevelSwitch":0,"authorIdStr":"3574064552756113","idStr":"3574064552756113"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/831707852","repostId":1165430007,"repostType":4,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":831705592,"gmtCreate":1629345915516,"gmtModify":1676530010310,"author":{"id":"3586392338558856","authorId":"3586392338558856","name":"Jokhang","avatar":"https://static.tigerbbs.com/d189ae3ec01747be0bd951c14c32cb94","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"3586392338558856","idStr":"3586392338558856"},"htmlText":"Tesla to the moon","listText":"Tesla to the moon","text":"Tesla to the moon","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":6,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/831705592","repostId":1165430007,"repostType":4,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5575832,"gmtCreate":1629348681429,"gmtModify":1663232596942,"authorId":3579410204959880,"author":{"id":3579410204959880,"idStr":"3579410204959880","authorId":3579410204959880,"name":"Yappydappy","avatar":"https://static.tigerbbs.com/5b6252f503d56d09093797f9e318ebf9","vip":1,"crmLevel":4,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":831705592,"type":1,"supId":0,"prevId":0,"content":"Yes pls","text":"Yes pls","html":"Yes pls"}],"langContent":"EN"},{"id":831702434,"gmtCreate":1629345810428,"gmtModify":1676530010295,"author":{"id":"3570598542159923","authorId":"3570598542159923","name":"ShawnKoh1","avatar":"https://static.tigerbbs.com/0045c4894f8a2755b17a9e8518df4d5e","vip":1,"crmLevel":4,"crmLevelSwitch":0,"authorIdStr":"3570598542159923","idStr":"3570598542159923"},"htmlText":"Like and comment","listText":"Like and comment","text":"Like and comment","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":2,"repostSize":0,"link":"https://ttm.financial/post/831702434","repostId":1165430007,"repostType":4,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5575931,"gmtCreate":1629349484857,"gmtModify":1663232597550,"authorId":3582782817523238,"author":{"id":3582782817523238,"idStr":"3582782817523238","authorId":3582782817523238,"name":"HHTan","avatar":"https://static.tigerbbs.com/c8134085c63f43886300c1e18d3ab40c","vip":1,"crmLevel":5,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":831702434,"type":1,"supId":0,"prevId":0,"content":"comment","text":"comment","html":"comment"},{"id":5575486,"gmtCreate":1629345819248,"gmtModify":1663232595137,"authorId":3570598542159923,"author":{"id":3570598542159923,"idStr":"3570598542159923","authorId":3570598542159923,"name":"ShawnKoh1","avatar":"https://static.tigerbbs.com/0045c4894f8a2755b17a9e8518df4d5e","vip":1,"crmLevel":4,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":831702434,"type":1,"supId":0,"prevId":0,"content":"cimmebt","text":"cimmebt","html":"cimmebt"}],"langContent":"EN"},{"id":831709511,"gmtCreate":1629345340833,"gmtModify":1676530010006,"author":{"id":"3575390834397772","authorId":"3575390834397772","name":"Tigal80","avatar":"https://static.tigerbbs.com/86f76710483a16eae0642572ffa5f1be","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"3575390834397772","idStr":"3575390834397772"},"htmlText":"yes","listText":"yes","text":"yes","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/831709511","repostId":1165430007,"repostType":4,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5575495,"gmtCreate":1629345922836,"gmtModify":1663232594927,"authorId":3586392338558856,"author":{"id":3586392338558856,"idStr":"3586392338558856","authorId":3586392338558856,"name":"Jokhang","avatar":"https://static.tigerbbs.com/d189ae3ec01747be0bd951c14c32cb94","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":831709511,"type":1,"supId":0,"prevId":0,"content":"[Smile]","text":"[Smile]","html":"[Smile]"}],"langContent":"EN"},{"id":831477032,"gmtCreate":1629345074526,"gmtModify":1676530009937,"author":{"id":"3582121780465244","authorId":"3582121780465244","name":"IC2","avatar":"https://static.tigerbbs.com/7b2bf61019ed22cea10bd830aefa9369","vip":1,"crmLevel":3,"crmLevelSwitch":0,"authorIdStr":"3582121780465244","idStr":"3582121780465244"},"htmlText":"Like please. Thanks.&nbsp;","listText":"Like please. Thanks.&nbsp;","text":"Like please. Thanks.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":6,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/831477032","repostId":1165430007,"repostType":4,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5575535,"gmtCreate":1629346251846,"gmtModify":1663232594840,"authorId":3574167470846346,"author":{"id":3574167470846346,"idStr":"3574167470846346","authorId":3574167470846346,"name":"cozyli","avatar":"https://static.tigerbbs.com/509ef7c09d0624801748249c5a3e0117","vip":1,"crmLevel":4,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":831477032,"type":1,"supId":0,"prevId":0,"content":"done","text":"done","html":"done"}],"langContent":"EN"},{"id":831474286,"gmtCreate":1629344993645,"gmtModify":1676530009929,"author":{"id":"3581849551321020","authorId":"3581849551321020","name":"Mich77","avatar":"https://static.tigerbbs.com/e68e0beedd6e067e59c605653c639699","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"3581849551321020","idStr":"3581849551321020"},"htmlText":"Please like, thanks&nbsp;","listText":"Please like, thanks&nbsp;","text":"Please like, thanks","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/831474286","repostId":1165430007,"repostType":4,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5575536,"gmtCreate":1629346260118,"gmtModify":1663232593937,"authorId":3574167470846346,"author":{"id":3574167470846346,"idStr":"3574167470846346","authorId":3574167470846346,"name":"cozyli","avatar":"https://static.tigerbbs.com/509ef7c09d0624801748249c5a3e0117","vip":1,"crmLevel":4,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":831474286,"type":1,"supId":0,"prevId":0,"content":"done","text":"done","html":"done"}],"langContent":"EN"},{"id":831474148,"gmtCreate":1629344981384,"gmtModify":1676530009921,"author":{"id":"3576295472948618","authorId":"3576295472948618","name":"RChia","avatar":"https://static.tigerbbs.com/cea89db323c5328650526772cf80ec19","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"3576295472948618","idStr":"3576295472948618"},"htmlText":"Like and comment&nbsp;","listText":"Like and comment&nbsp;","text":"Like and comment","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":6,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/831474148","repostId":1165430007,"repostType":4,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5575388,"gmtCreate":1629345007284,"gmtModify":1663232595127,"authorId":3581849551321020,"author":{"id":3581849551321020,"idStr":"3581849551321020","authorId":3581849551321020,"name":"Mich77","avatar":"https://static.tigerbbs.com/e68e0beedd6e067e59c605653c639699","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":831474148,"type":1,"supId":0,"prevId":0,"content":"liked","text":"liked","html":"liked"}],"langContent":"EN"},{"id":831475637,"gmtCreate":1629344842229,"gmtModify":1676530009906,"author":{"id":"3581829959470650","authorId":"3581829959470650","name":"ccwee","avatar":"https://static.tigerbbs.com/652d99331e3c23c682d7e58cfc9f6544","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"3581829959470650","idStr":"3581829959470650"},"htmlText":"latest&nbsp;","listText":"latest&nbsp;","text":"latest","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/831475637","repostId":1165430007,"repostType":4,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5575385,"gmtCreate":1629344992461,"gmtModify":1663232593836,"authorId":3576295472948618,"author":{"id":3576295472948618,"idStr":"3576295472948618","authorId":3576295472948618,"name":"RChia","avatar":"https://static.tigerbbs.com/cea89db323c5328650526772cf80ec19","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":831475637,"type":1,"supId":0,"prevId":0,"content":"Like ","text":"Like ","html":"Like "}],"langContent":"EN"},{"id":831472404,"gmtCreate":1629344748508,"gmtModify":1676530009883,"author":{"id":"3571706108874965","authorId":"3571706108874965","name":"Dem0171c","avatar":"https://static.tigerbbs.com/28a58b3c964064b6dcc209f03697fba7","vip":1,"crmLevel":2,"crmLevelSwitch":1,"authorIdStr":"3571706108874965","idStr":"3571706108874965"},"htmlText":"Latest","listText":"Latest","text":"Latest","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":7,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/831472404","repostId":1165430007,"repostType":4,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5575363,"gmtCreate":1629344821619,"gmtModify":1663232593845,"authorId":3581982556682195,"author":{"id":3581982556682195,"idStr":"3581982556682195","authorId":3581982556682195,"name":"Dac19","avatar":"https://static.tigerbbs.com/82e91a13f45be8e9732185d50df6e7bf","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":831472404,"type":1,"supId":0,"prevId":0,"content":"Liked","text":"Liked","html":"Liked"}],"langContent":"EN"},{"id":831476543,"gmtCreate":1629344696682,"gmtModify":1676530009860,"author":{"id":"3574846858482552","authorId":"3574846858482552","name":"newbiee","avatar":"https://static.tigerbbs.com/52066c922d6c53b542a87db244dd75a3","vip":1,"crmLevel":3,"crmLevelSwitch":0,"authorIdStr":"3574846858482552","idStr":"3574846858482552"},"htmlText":"K","listText":"K","text":"K","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":7,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/831476543","repostId":1165430007,"repostType":4,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5575425,"gmtCreate":1629345278065,"gmtModify":1663232593839,"authorId":3579349908917292,"author":{"id":3579349908917292,"idStr":"3579349908917292","authorId":3579349908917292,"name":"Winteriness","avatar":"https://static.tigerbbs.com/7b003b4d6e783d6a9f76a3e5eae3db0e","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":831476543,"type":1,"supId":0,"prevId":0,"content":"k","text":"k","html":"k"}],"langContent":"EN"},{"id":831478769,"gmtCreate":1629344639151,"gmtModify":1676530009891,"author":{"id":"3573767135380290","authorId":"3573767135380290","name":"晓MIIN","avatar":"https://static.tigerbbs.com/9e223a6a40d05afa03fb58b646e13cd1","vip":1,"crmLevel":1,"crmLevelSwitch":0,"authorIdStr":"3573767135380290","idStr":"3573767135380290"},"htmlText":"[微笑]&nbsp;","listText":"[微笑]&nbsp;","text":"[微笑]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":7,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/831478769","repostId":1165430007,"repostType":4,"repost":{"id":"1165430007","pubTimestamp":1629344293,"share":"https://ttm.financial/m/news/1165430007?lang=&edition=fundamental","pubTime":"2021-08-19 11:38","market":"us","language":"en","title":"Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe","url":"https://stock-news.laohu8.com/highlight/detail?id=1165430007","media":"seekingalpha","summary":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units deliver","content":"Summary\n<ul>\n <li>Tesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.</li>\n <li>With its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.</li>\n <li>Yet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.</li>\n <li>Further volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0d224f361e446270181483dd4b0064fe\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\">Justin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the&nbsp;largest intraday landslide&nbsp;in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the&nbsp;inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our&nbsp;recent coverage&nbsp;on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to&nbsp;outpace gasoline engines&nbsp;by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards&nbsp;14 million units by 2025&nbsp;and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And&nbsp;China and Europe&nbsp;are expected to lead global EV adoption in the first half of the decade, with the&nbsp;U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\n<img src=\"https://static.tigerbbs.com/8b0fd06a72dda831c5075fcebc8f9a94\" tg-width=\"640\" tg-height=\"225\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The&nbsp;Megapack&nbsp;is already sold out until next year, while the&nbsp;Powerwall&nbsp;is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\n<img src=\"https://static.tigerbbs.com/a5d485578bc99838455b9aa0b4872890\" tg-width=\"640\" tg-height=\"211\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\n<img src=\"https://static.tigerbbs.com/6c020719512f5ba9f58ec93c13cfc9cb\" tg-width=\"640\" tg-height=\"223\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&amp;A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like&nbsp;India. Meanwhile, research and development (“R&amp;D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\n<img src=\"https://static.tigerbbs.com/257781f38934090ec17fe0c9a6741e58\" tg-width=\"640\" tg-height=\"219\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\n<img src=\"https://static.tigerbbs.com/6fffa7c8bd115bdc41dfb1ce06c5be8d\" tg-width=\"640\" tg-height=\"217\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\n<img src=\"https://static.tigerbbs.com/11327582fa264fd0fb4536a9feeda72d\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline&nbsp;since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any&nbsp;formal regulatory limits&nbsp;on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also&nbsp;plunged by more than 5%&nbsp;in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a&nbsp;69% plunge&nbsp;from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the&nbsp;April protest&nbsp;at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers&nbsp;Renesas and Bosch. In addition to&nbsp;price hikes&nbsp;on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\n<img src=\"https://static.tigerbbs.com/66f4a3a7f437eac9e91a5e7323a60155\" tg-width=\"640\" tg-height=\"200\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a&nbsp;low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\n<img src=\"https://static.tigerbbs.com/07d856bb74f8d9f4b1d3bbee983955cd\" tg-width=\"640\" tg-height=\"265\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\n<img src=\"https://static.tigerbbs.com/da9215b39b7df35ddd7a00a7e5d96716\" tg-width=\"640\" tg-height=\"204\" width=\"100%\" height=\"auto\">Source: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the&nbsp;total size of the most reputable legacy automakers&nbsp;in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Tesla Stock Overvalued Or Undervalued? Expect Further Volatility With The NHTSA Probe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 11:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most ...\n\n<a href=\"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4450426-tesla-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1165430007","content_text":"Summary\n\nTesla continues to lead global electric vehicle sales, with more than 386,000 units delivered in the first half of the year.\nWith its valuation currently close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is likely Tesla's growth prospects are already priced in.\nYet, headwinds ranging from supply chain disruptions and production delays to the most recent NHTSA probe on Tesla's autopilot system have put pressure on its valuation time and time again.\nFurther volatility is expected in the near term as investors continue to mull on the outcome of the ongoing NHTSA investigation on Tesla's autopilot system, as any regulatory limits on the feature could lead to adverse repercussions to the EV maker's outlook.\n\nJustin Sullivan/Getty Images News\nTesla (TSLA) continues to lead global electric vehicle (“EV”) sales this quarter, with record production and deliveries of 206,421 and 201,250 units, respectively, during the second quarter alone. Combined with the 180,338 and 184,800 units produced and delivered during the first quarter, Tesla is steadily progressing towards its current year guidance of growing deliveries by 50% year-over-year, which translates to approximately 750,000 vehicles, following the 36% annual growth observed in 2020. Deliveries during the first half of 2021 were already up by more than 115% from last year, leading to year-to-date profits of more than $1.6 billion already, which is a first in Tesla history.\nWhile the first profitable year for Tesla in 2020 was scrutinized by investors for being generated primarily from the sale of automotive regulatory credits instead of actual EV sales, the narrative has largely improved in recent quarters with significant expansion of auto gross profit margins excluding the impact from credit sales. Management had attributed the improvements realized to date to better cost optimization across the production line, coupled with strong production and delivery volumes which continue to be a strong indicator of progress towards scale.\nYet, the industry leader, like many of its peers, has warned of the increasing pressures that the ongoing chip supply shortage is placing on its efforts to address the massive backlog of demand observed across its business, including both EV and energy generation and storage sales. The ongoing delays related to the deployment of its 4680 battery cells have also inadvertently increased uncertainty over the production and delivery timelines pertaining to the Semis and Cybertruck. And most recently, the National Highway Traffic Safety Administration’s (“NHTSA”) formal probe into Tesla’s Autopilot system following almost a dozen collisions that have resulted in serious injuries and even fatality has also sent Tesla shares on the largest intraday landslide in more than three months on Monday.\nAs Elon Musk had said at the recent earnings call, Tesla continues to benefit from the inflection point of public sentiment towards EVs, and this has been proven through the EV maker’s strength in delivery volumes achieved to date. However, Tesla’s strong financial prospects are likely to have been priced in by investors long ago based on the stock’s sky-high valuation. And what awaits is more volatility in the near term as investors mull for more insight on the ongoing supply chain disruptions and regulatory limits on Tesla’s Autopilot or Full Self-Driving (“FSD”) system, its most prized marketing feature.\nA Recap on Tesla’s Financial Prospects\nTesla’s second quarter results remain in line with consensus expectations, as well as our base case forecast outlined in our recent coverage on the stock. And further opportunities are in store for Tesla to grow both its top and bottom lines, as global demand for EVs and green energy solutions continue to accelerate as we embark on a decade charged with mandates to combat climate change.\nWith the transportation sector currently accounting for one of the largest portions of global greenhouse gas emissions (“GHG”), global EV adoption continues to play a critical role in decarbonizing the economy. And this is reflected through the stringent emissions standards and favorable financial incentives on EV and green energy solution purchases implemented by governments across large economies, including the U.S., China, and Europe, in recent years. Combined with continuous improvements made to battery cell technology to elongate range and lower related manufacturing costs to achieve price parity with traditional ICE vehicles, EVs have become a viable choice for consideration amongst car buyers.\nThe change in public sentiment towards EVs has accelerated its adoption by at least five years compared to earlier projections, with global EV sales expected to outpace gasoline engines by the end of the decade. Global EV sales are forecasted to jump from 3.1 million units in 2020 towards 14 million units by 2025 and up to145 million units by the end of the decade, representing significant additional growth opportunities for Tesla. And China and Europe are expected to lead global EV adoption in the first half of the decade, with the U.S.– Tesla’s strongest market – to pick up and lead in the latter half of the decade.\nTaking into consideration the above industry trends and Tesla’s growth trajectory with continued expansion of its product and service offerings across some of the largest and fastest-growing EV markets, our base case forecast projects total automotive revenues of $41.4 billion by the end of the year, with growth at a CAGR of approximately 20% towards $158.3 billion by 2030. Service revenues are expected to grow accordingly as well, as they are primarily generated from after-sales vehicle services; our base case forecast projects $3.7 billion by the end of the year, with growth towards $14.0 billion by the end of the decade.\nSource: Author, with data from our internal financial forecasts\nTesla has also been experiencing pent-up demand for its energy generation and storage solutions in recent quarters. The Megapack is already sold out until next year, while the Powerwall is already accumulating a backlog of orders. This is consistent with market expectations on the broader growth across the green energy storage sector, which is expected to grow at a CAGR of 12.3% through to 2030. The storage solutions sector is forecasted to grow at a CAGR of at least 20% through to 2026. Based on Tesla’s current production capacity on the two leading products in its energy generation and storage solutions business, combined with the market outlook on global demand, our base case forecast projects energy generation and storage solutions revenues of $3.1 billion by the end of the year, with growth at a CAGR of 9% towards $4.7 billion by the end of the decade. The growth assumption applied is consistent with market trends predicted for both the green energy generation and storage sectors, discounted for the ongoing supply chain impacts related to the global semiconductor shortage, which may require a reallocation of resources to prioritize vehicle production instead.\nSource: Author, with data from our internal financial forecasts.\nCost of revenues as a percentage of total revenues are expected to improve overtime as well due to cost efficiencies achieved through economies of scale as Tesla’s vehicle and energy generation and storage solutions sales continue to ramp up. Specifically, auto gross profit margins are expected to gradually climb towards 25%, excluding credit sales, in the long run as battery costs continue to lower over time with technological enhancements, and overall production costs improve with scale. Our forecast projects total cost of sales of $37.0 billion by the end of the year, with growth at a CAGR of 18.4% towards $134.4 billion by 2030, which is consistent with expectations of further margin expansion in the long run.\nSource: Author, with data from our internal financial forecasts.\nOperating expenses are also expected to see meaningful decline over the forecasted period, especially selling, general and administrative (“SG&A”) expenses as operations become more efficient with scale, even with additional headcount that may be needed in the long run to support further expansion in the Asia Pacific region like India. Meanwhile, research and development (“R&D”) spending are expected to remain elevated at current levels in proportion to total revenues to support ongoing technological improvements required for sustainable growth across its automotive and energy generation and storage solutions businesses. As a result, total operating expenses of $6.7 billion are projected for 2021, with growth at a CAGR of 18.2% towards $24.7 billion by 2030.\nSource: Author, with data from our internal financial forecasts.\nCombined with other nominal expenses related to financing and other ancillary activities, our forecast projects net income of $3.4 billion for 2021, which is approximatelytriple2020’s net income and consistent with Tesla’s strong sales momentum observed in the first half of the year. The bottom line is expected to further grow towards $13.2 billion by the end of the decade as production and deliveries continue to ramp up for both its EVs and energy generation and storage systems.\nSource: Author, with data from our internal financial forecasts.\ni. Base Case Financial Projections:\nSource: Author, with data from our internal financial forecasts.\nRecurring Volatility Due to Regulatory Probes and Supply Chain Disruptions\nYet, recent headwinds related to ongoing supply chain disruptions, production delays, international expansion woes, and the NHTSA’s formal probe into Tesla’s FSD system have triggered a drop in Tesla’s share price to the sub-$700 level almost immediately following the respective announcements every time. And the trend may indicate that the EV maker’s promising financial outlook from a fundamental point of view had already been priced into its share performance by investors long ago, as its recent price appreciations have been unable to retain momentum, showing almost no resistance to any news.\nNHTSA Probe\nMusk may have spoken too soon with his recent claim that U.S. regulation is likely not a “fundamental limiter” for Tesla. Following the NHTSA’s announcement of a formal investigation into Tesla’s autopilot system on Monday, the stock immediately retracted by as much as 5.7%. This was the biggest intraday decline since June, when more than 285,000 Tesla’s sold in China were recalled to address safety issue related to the vehicles’ autopilot systems. The NHTSA’s investigation covers about 765,000 Tesla vehicles from model years 2014 to 2021, and could potentially lead to mass recalls. With FSD and autopilot being Tesla’s most-prized features, any formal regulatory limits on them could result in large setbacks for the EV maker.\nChina Sales Decline\nTesla’s shares also plunged by more than 5% in May following reports that vehicle orders in China declined by almost 30% compared to April. The drop in sales of China-made Teslas to the local market continued into July with a 69% plunge from June’s sales – only 8,621 Tesla vehicles produced in Shanghai were sold to the local market, while units exported to Europe increased by almost four times to 24,347. Tesla is also starting to feel the heat of competition in the Chinese market, with domestic peers like Li Auto(NASDAQ:LI), NIO(NYSE:NIO), and XPeng(NYSE:XPEV)delivering similar volumes to the domestic market in July, compared to previous months where Tesla’s China sales outperformed by multiple times. In response to the falling sales volumes in the world’s largest and fastest-growing EV market, Tesla China has released a statement indicating hopes to recuperate its lost sales from the first half of the year with the recently launched Model Y, which comes with an affordable price tag to “attract more internal combustion engine car owners to embrace the electric vehicles”. But with the ongoing regulatory crackdown in China and a government that is favoring the growth of home-bred EV makers, combined with the run of negative press ranging from the April protest at the Shanghai Auto Show to the June recall of almost every Tesla vehicle sold in China, Tesla may continue to face some headwinds in its second-biggest market outside of the U.S., subjecting the EV maker’s stock to further volatility in the near-term.\nSupply Chain Disruptions and Production Delays\nThe ongoing global chip supply shortage that has sent the shares of every automaker on a plunge-spree following warnings by management at their respective earnings calls may also be coming for Tesla. Although the EV maker has, in previous quarters, been able to manage the supply chain bottleneck and maintain production by diligently updating its software to be compatible with new chips sourced from different suppliers, Musk has warned of more extreme pressures ahead during the second quarter earnings call, and more recently, on Twitter while calling out its suppliers Renesas and Bosch. In addition to price hikes on some Tesla vehicle models announced in May due to the ongoing supply chain disruptions, the energy generation, and storage solutions arm of the business is also starting to experience difficulties in securing the semiconductors needed to manufacture the Powerwall, which is currently accumulating a significant backlog as the company continues to prioritize allocation of available chips to manufacturing cars. The continuous delay in volume production of the 4680 battery cells due to cell supply bottlenecks and engineering problems, which have inadvertently pushed back the production of Tesla Semis and the Cybertruck to at least the end of 2022, has also left a sour taste in investors’ mouths. Some analysts have even lowered their price targets and downgraded ratings on the stock following the delays that have rolled on from one quarter to another.\nValuation\nSource: Author, with data from our internal valuation analysis.\nOur outlook on Tesla remains neutral, with a price target range of $657.60 to $691.45 based on an estimated equity value of $651.0 billion to $684.5 billion. This compares to Tesla’s share price of approximately $651 at the time of writing.\nOur valuation is derived from a discounted cash flow (“DCF”) analysis over a 10-year discrete period in conjunction with the financial projections for Tesla as discussed in earlier sections. A WACC of 10.1% is applied to discount Tesla’s projected free cash flows in our valuation analysis, which is consistent with the company’s current risk profile given its continued reduction of leverage with growing cash flows generated from operations, offset by the recent volatility observed on the company’s share performance.\nOur analysis also assumes an EV/EBITDA multiple of 69.3x to 73.2x. As the industry leader in terms of revenues and EV sales, Tesla’s forward-looking EV/EBITDA multiple continues to lead its peers’. However, the EV maker’s valuation has experienced significant volatility in the past year, with the multiple ranging from a low of 39.7x to a high of beyond 100x. The exit multiple used in computing our price target range is based on the average observed in the last three months, which is reflective of Tesla’s recent financial performance, its growth prospects compared to industry peers, as well as the stock’s volatility in response to recent news developments.\ni. Valuation Analysis:\nSource: Author, with data from our internal valuation analysis.\nii. Sensitivity Analysis:\nSource: Author, with data from our internal valuation analysis.\nConclusion\nWith its valuation close to the total size of the most reputable legacy automakers in the U.S. and Europe combined, it is evident that Tesla’s promising prospects related to continued sales growth, global expansion, and the deployment of cutting-edge battery cell and autonomous driving technology have already been priced in. What awaits is whether its current share price of nearly $700 is sustainable in the long run, which depends significantly on materialization of its growth prospects outlined above. But with recent headwinds related to supply chain bottlenecks and regulatory probes, which have caused Tesla’s share price to tumble time and time again, further volatility is expected in the near term. This holds especially true as investors continue to mull on the outcome of the ongoing global chip supply shortage, production delays on the 4680 battery cells and related new vehicle programs, and more recently, the NHTSA’s investigation on Tesla’s autopilot system, which could lead to significant impacts to its EV sales in the U.S. – its largest market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":93,"commentSize":23,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}