Tesla Stock : Buy Before Earnings? | Tesla Stock Analysis | Is Tesla (TSLA) a buy now?

[Music] hello everyone it's david here and welcome back to learning finance in today's video guys i want to give an update on tesla stock so we are gonna see tesla stock price which as we have seen over the past five days actually broke above the seven hundred dollars level uh ahead of earnings which are going to happen in around 10 days so is tesla today a buy actually what is the price target that tesla can reach with earnings coming and what are the risks right what is the valuation of it so that's what i will try to tell you in today's video guys the only thing i ask you is please leave me a like it's very important and i thank you for it and subscribe to your channel so you don't miss any new updates let's begin alright guys so this is my full tesla evaluation spreadsheet actually is quite big quite boring okay so if you want to see actually how i did it detailed exact reason behind it i did a video around 10 days ago i leave the link down in the description if you are interested i will not repeat the same stuff because youtube doesn't like long videos and also it can be quite boring for some people so i'll leave the link down if you want to check it out just to be quite quick for the next five years of tesla so here i have the past five years trying to forecast the next five years what i've done deliveries so first of all deliveries we have seen that they have already beat expectation in q1 which is the weakest quarter for tesla i said that 2021 i put 900 000 deliveries that's a huge jump from 2020 coming out of the pandemic and then going on into 2025 with the elo masks goal of 50 growth okay on average reaching around 4 million 4.1 million in 2025 which will be 20.35 of the total global market share in electric vehicles deliveries as estimated by those guys over there okay so jp morgan ihs arc and deloitte that will push the automotive revenues obviously the average cost per vehicle will go down if they want to reach masses that's absolutely normal and the automotive revenues in total will hit 172.6 billion in 2025 according to that scenario the growth implied is quite huge but this is what the market is pricing so tesla if he wants to continue to trade at those valuation they have to show that and they have to achieve that otherwise it's gonna be a bumpy ride but anyway let's take a look the second tesla revenue division is the services and orders which goes to add to the automotive revenues another 8.8 of this okay so this is what historically has been for tesla meaning that 2025 they will reach 15.3 billion of that of that division which is related to the automotive revenues right so here it comes tesla insurance if you break something if you need a replacement this is the part of the business that's it and this is a business that loses money okay but it's useful to actually boost the revenues in automotive then we have tesla energy and storage which it should continue to grow at a very high pace if it wants to actually justify tesla valuation that's a very interesting business for tesla and lots of analysts are saying that the market it's not pricing these fairly and but by the way my estimates are that in this scenario you can reach around 10.3 billion in 2025 coming from 1.9 billion in 2020 that's a decent growth for this revenue division then we have the magic robot taxi now here is what actually can make tesla outperform this spreadsheet actually destroy this press sheet or make tesla go very lower than that okay so that's the magic key of tesla robo taxi which is supposed to not come until 2022 so 2021 is zero and then i put it as a percentage of automotive revenues because elon musk said that robo taxi could actually bring to tesla basically the double of what they are making in automotive so that's why i put that and here for this scenario 25 means that for one dollar in automotive they will bring 25 cents more in robot taxi so according to elon musk it would say 100 but let's keep it like that and see what we get i will change it later by the way so just wait a little bit more there will gives us the total revenue which will reach 241.4 billion in 2025 and that's a massive growth if you see a wall analysts are expecting this actually beats expectations okay so don't tell me that i haven't been bullish enough because i think that this will be remarkable if tesla is able to achieve that and actually it would justify the high valuation today it'd be damaging around 22 percent free cash flow to equity around 16.50 margin so the business should scale right and when it comes to multiples guys in 2020 we had obviously the boom but i am expecting now to actually normalize a bit for the ev3 bit damaging i said 30x 2025 so something similar to what amazon is pricing today and then prices says ratio coming down to around 7x which on average has been what tesla was trading at before the craziness of 2020 and actually what a lot of tech big companies are trading at so the recap we have the three different valuation ebitda ps and free cash flow those are the average price targets that we have actually with the total revenue and i told you 241.49 billion dollars in 2025 so we do an average the average price target 1224.76 for tesla and today's share price is this one so on average the year-over-year compounded will be 12.19 percent now this it will it means that i will continue to beat the market right the problem is that there is a little bit of dilution okay so i have included in the model dilution because tesla in the past has diluted shareholders on average 11 every single year which is huge i expect as the business it continues to grow and scale for that to actually decrease and eventually go to zero because it's not great for investors to be diluted every single year so this is why the compound over there is less than the discount rate of the market cap because of dilution but by the way for the fair price today we have that two different methods ebitda and press the sales we do an average and we have 851 cents okay per share for tesla stock the price today is 730 meaning that it's up 14 below it okay margin of safety whatever you want to consider now how tesla can destroy this valuation well it's pretty simple first of all achieves 25 percent of the market so meaning that here we will have 5 million deliveries and then the robo taxi business doing what elon musk said so to double automotive revenues 100 okay now by leaving everything the same we have extreme valuations price targets 2 267 dollars per share for tesla stock that would mean still a 2x even though the valuation is already huge today and eurovia compounded massive 28.65 now to be fair with you i think that this is quite exuberant okay so i know the arc gave a price target of 3 000 but for me if you follow my channel you know that i prefer to remain a little bit more realistic so i say that this is what one realistically can expect from tesla and don't get me wrong this is a big bullish scenario this is the growth priced in this scenario is actually quite huge because total revenue guys it means that tesla should go from 31.5 billion in 2020 to 241.4 in 2025. now this is obviously big and if tesla is able to do that congratulations to them but actually it looks like they are in the right path to do it what is the negative side is that a lot of this growth has already been priced in by the market in today's valuation so what happens if tesla let's say something goes wrong and misses one of those earnings well guys that's the risk that's the risk you have to face if you buy tesla today or if you are continuing to hold tesla meaning that this is the growth that it's priced already and if something goes wrong you can see a red days okay so this is just to be fair this is just to be real and we cannot deny it tesla price today is pricing a very optimistic growth coming on and tesla should achieve it otherwise it's gonna be a bumpy ride and that's the only thing you have to keep in mind going on in the future now before earnings actually here we can see on the graph that something interesting is coming on first of all we broke above the 700 level which is obviously an important era for tesla we see how it went above also the 50 moving average over there so that's kind of bullish right after this pullback that we have seen previously in 2021 now here actually we have an interesting setup in terms of technical analysis before the earnings so by giving you another price target which is actually pretty close to the fundamental analysis one so to make it clear we push away that resistance which is now a support and let me show you one thing now first of all let me take the pen and this can be actually a bullish head shoulders formation now shoulder head shoulder over there and we take the neck line which actually it can be considered as this so we see that the market break the neckline over there actually let me show you here and so here it was the 31st of march we see that it went above pull it back okay on the neckline and now it's continuing to going higher confirming this pattern now this pattern has a price target which actually you take from the bottom of the head to the neckline and you push it back where actually the market break above it and we see how tesla according to that can reach 865 dollars per share okay so around 860 dollars per share which is kind of very near to where the fundamental analysis is actually pointing the tesla fair price today right so on average if i could take a rectangle i could say that if earnings will go well tesla could actually come back to near very near the previous highs that we made in actually the beginning of 2021 okay january so i showed you the fundamental valuation with the price target and the fair price i showed you also the price action and technical analysis what is showing okay with another price target which is very similar to that one now obviously uh you know that i own tesla share i bought during the drop that we have had one month ago near 500 i spoke about it in the channel i told you why i was gonna buy near 500 okay actually the reason is pretty simple because this valuation as i told you is still quite bullish okay so i preferred to have a margin of safety above 30 on to that that's why i bought there however i will continue to hold my shares let's see what we get actually in the earnings that will come pretty soon so i hope you find the video interesting guys leave me down a comment with your opinion what do you think about tesla stock will it continue to outperform subscribe to the channel if you want and as always guys have a wonderful day

Channel: Learning Finance

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Id: jcJL1YSkoZI

Length: 14min 0sec (840 seconds)

Published: Fri Apr 16 2021