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Tesla Inc TSLA

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Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Raising Our Tesla FVE to $650 on Improved Near-Term Outlook; Shares Overvalued

Seth Goldstein, CFA Senior Equity Analyst

Analyst Note

| Seth Goldstein, CFA |

Tesla delivered impressive third-quarter results as operating profits soared nearly 150% versus the prior-year quarter. The growth was driven by a 73% increase in vehicles delivered and lower costs, with gross and operating margins reaching record highs. We have increased our near-term outlook to incorporate improved automotive gross margins and lower overhead expenses over the next few years. Our long-term outlook, which had assumed increased profit margins, is intact. Having updated our model to reflect these changes, we're raising our fair value estimate to $650 per share from $600. Our narrow moat rating is unchanged.

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Company Profile

Business Description

Founded in 2003 and based in Palo Alto, California, Tesla is a vertically integrated sustainable energy company that also aims to transition the world to electric mobility by making electric vehicles. The company sells solar panels and solar roofs for energy generation plus batteries for stationary storage for residential and commercial properties including utilities. Tesla has multiple vehicles in its fleet, which include luxury and mid-size sedans and crossover SUVs. The company also plans to begin selling more affordable sedans and small SUVs, a light-truck, semi-truck, and a sports car. Global deliveries in 2020 were roughly 500,000 units.

Contact
3500 Deer Creek Road
Palo Alto, CA, 94304
T +1 650 681-5000
Sector Consumer Cyclical
Industry Auto Manufacturers
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 70,757

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