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The comparison is misleading because Tesla had 120M shares outstanding in 2013 versus 170M shares today. $240 per share at the time is equivalent to $169 per sh

The comparison is misleading because Tesla had 120M shares outstanding in 2013 versus 170M shares today. $240 per share at the time is equivalent to $169 per share today or $28B in market capitalization. It’s still 15% cheaper than today’s share price.

earthshot 7y ago
You need to adjust for cash and debt to get the enterprise value. If you do so, you’ll find that Tesla is worth about 50% less than it was.
- gpm 7y ago
  Do you mean more? Because according to the comment above debt is 11B, and I happen to know that they have ~2B cash on hand, so roughly speaking enterprise value should be 9B larger than market cap right now, and it should have been less than 600M above market cap back then (their old debt value also listed in a comment above).
  - atdrummond 7y ago
    Misread, please ignore.
    - TorKlingberg 7y ago
      That depends on what you are trying to calculate. If you want the market value of a company it's the market cap, # of shares * share price. If you want the value of the company as a going concern it's market cap + debt - cash.
- Reason077 7y ago
  Enterprise value is not derived from market cap. Rather, market capitalisation reflects investor’s assessment of the enterprise value. Whether rational or not, this already takes cash and debt positions into account.
  - kgwgk 7y ago
    https://en.m.wikipedia.org/wiki/Enterprise_value https://en.m.wikipedia.org/wiki/Enterprise_value
- ajross 7y ago
  That's not right either. The (incorrect) headline isn't about what Tesla is "worth" to Apple, it's what the purchase price would have been. The market has already priced in things like growth expectations and debt load, that's the whole point of having a stock market in the first place.
bryanlarsen 7y ago
Also, the buyer would be assuming $11B in debt rather than 600M in 2013.
thegranderson 7y ago
As those below mentioned, you have to use TEV here. Based on TSLA Q2 2013 vs. Q1 2019 financials, you end up with a TEV in 2013 of $28.2B vs. today of $44.3B. The 2013 calc is: $240/sh * 118mm shares = $28.4B market cap, less $746mm cash, plus $576mm debt = $28.2B TEV The 2019 calc is: $204/share * 173mm shares = $35.3B market cap, less $2.2B cash, plus $11.2B debt = $44.3B TEV For those mentioning subtracting the debt, that's incorrect. A company is capitalized with equity and debt. To buy the whole company, you have to buy both. But when you buy the equity, you get the cash, so you subtract that out, since buying cash isn't relevant. You then have to add the debt, because you have to pay off all the debt to own the company outright.
kgwgk 7y ago
That comparision is also misleading, arguably more. The title should be "Apple tried to buy Tesla shares for more than they are currently worth": 2013 shareholders would have done much better by selling at $240 then rather than holding down to $205 six years later.

earthshot 7y ago

You need to adjust for cash and debt to get the enterprise value. If you do so, you’ll find that Tesla is worth about 50% less than it was.

gpm 7y ago
Do you mean more? Because according to the comment above debt is 11B, and I happen to know that they have ~2B cash on hand, so roughly speaking enterprise value should be 9B larger than market cap right now, and it should have been less than 600M above market cap back then (their old debt value also listed in a comment above).
- atdrummond 7y ago
  Misread, please ignore.
  - TorKlingberg 7y ago
    That depends on what you are trying to calculate. If you want the market value of a company it's the market cap, # of shares * share price. If you want the value of the company as a going concern it's market cap + debt - cash.
Reason077 7y ago
Enterprise value is not derived from market cap. Rather, market capitalisation reflects investor’s assessment of the enterprise value. Whether rational or not, this already takes cash and debt positions into account.
- kgwgk 7y ago
  https://en.m.wikipedia.org/wiki/Enterprise_value https://en.m.wikipedia.org/wiki/Enterprise_value
ajross 7y ago
That's not right either. The (incorrect) headline isn't about what Tesla is "worth" to Apple, it's what the purchase price would have been. The market has already priced in things like growth expectations and debt load, that's the whole point of having a stock market in the first place.

bryanlarsen 7y ago

Also, the buyer would be assuming $11B in debt rather than 600M in 2013.

thegranderson 7y ago

As those below mentioned, you have to use TEV here. Based on TSLA Q2 2013 vs. Q1 2019 financials, you end up with a TEV in 2013 of $28.2B vs. today of $44.3B. The 2013 calc is: $240/sh * 118mm shares = $28.4B market cap, less $746mm cash, plus $576mm debt = $28.2B TEV The 2019 calc is: $204/share * 173mm shares = $35.3B market cap, less $2.2B cash, plus $11.2B debt = $44.3B TEV For those mentioning subtracting the debt, that's incorrect. A company is capitalized with equity and debt. To buy the whole company, you have to buy both. But when you buy the equity, you get the cash, so you subtract that out, since buying cash isn't relevant. You then have to add the debt, because you have to pay off all the debt to own the company outright.

kgwgk 7y ago

That comparision is also misleading, arguably more. The title should be "Apple tried to buy Tesla shares for more than they are currently worth": 2013 shareholders would have done much better by selling at $240 then rather than holding down to $205 six years later.