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Plenty of DCF models predict a Tesla share price which is higher than today's closing price. The problem is that they necessarily must rely to a heavy degree on

by marvin 13y ago

Plenty of DCF models predict a Tesla share price which is higher than today's closing price. The problem is that they necessarily must rely to a heavy degree on assumptions about the future. Given that any realistic DCF model of Tesla needs to be probabilistic to some degree (measure different scenarios against each other) and that a company's true market value is still the unknown present-value adjusted sum of all its future earnings, we are still going to see massive disagreement about Tesla's correct valuation in the years ahead. Contemptuous comments about bajillion-dollar valuations and hype don't provide any value to this discussion. If you're arguing from authority, it's also worth pointing out that Damodaran was uncertain about his valuation in the comment thread after his latest valuation of Tesla.

hnnewguy 13y ago
>Contemptuous comments about bajillion-dollar valuations and hype don't provide any value to this discussion. The OP asked why the stock was down, and whether this was a buying opportunity. I offered perspective that it might not be, based on the analysis of someone respected in the field. I understand that DCF models can produce any numbers you wish (as does Prof. Damordaran; says so right in the article). But there's his model and there's his numbers, based mainly off assumptions that Tesla builds cars. Tell me, what value did your comment add to the discussion? If I sound "contemptuous", it's because the hype and fandom is tiring. Read the comments in this thread ("Tesla <3") or on Prof. Damodaran's article ("You can't vaue Tesla unless you've driven one!").
- marvin 13y ago
  Morgan Stanley's latest DCF arrived at $320/share, Goldman Sachs's arrived at $200, for instance. If your goal was to contribute by providing a contrarian view, that is fair enough and I might have misread the tone of your comment. I am merely pointing out that it is not just noveau riche kids and hype train riders who figure that Tesla is a good investment even at the current price - I figure that this is an interesting point, since my impression is that the financial press says the opposite.
001sky 13y ago
Given that any realistic DCF model of Tesla needs to be probabilistic to some degree (measure different scenarios against each other) and that a company's true market value is still the unknown present-value adjusted sum of all its future earnings, we are still going to see massive disagreement about Tesla's correct valuation in the years ahead. Contemptuous comments about bajillion-dollar valuations and hype don't provide any value to this discussion. This sentiment is mis-placed. Markets don't "argue" over prices. And DCF's don't set valuations based on measured anything. The DCF is there to simply inform the prejudices of market partcipants. The utility of DCfs is simply to get some insight into people's predudices. This is arguably more helpful than simply pretending that any single set of prejudices is more or less {correct, useful, interesting}.

by marvin 13y ago

hnnewguy 13y ago

>Contemptuous comments about bajillion-dollar valuations and hype don't provide any value to this discussion. The OP asked why the stock was down, and whether this was a buying opportunity. I offered perspective that it might not be, based on the analysis of someone respected in the field. I understand that DCF models can produce any numbers you wish (as does Prof. Damordaran; says so right in the article). But there's his model and there's his numbers, based mainly off assumptions that Tesla builds cars. Tell me, what value did your comment add to the discussion? If I sound "contemptuous", it's because the hype and fandom is tiring. Read the comments in this thread ("Tesla <3") or on Prof. Damodaran's article ("You can't vaue Tesla unless you've driven one!").

marvin 13y ago
Morgan Stanley's latest DCF arrived at $320/share, Goldman Sachs's arrived at $200, for instance. If your goal was to contribute by providing a contrarian view, that is fair enough and I might have misread the tone of your comment. I am merely pointing out that it is not just noveau riche kids and hype train riders who figure that Tesla is a good investment even at the current price - I figure that this is an interesting point, since my impression is that the financial press says the opposite.

001sky 13y ago

Given that any realistic DCF model of Tesla needs to be probabilistic to some degree (measure different scenarios against each other) and that a company's true market value is still the unknown present-value adjusted sum of all its future earnings, we are still going to see massive disagreement about Tesla's correct valuation in the years ahead. Contemptuous comments about bajillion-dollar valuations and hype don't provide any value to this discussion. This sentiment is mis-placed. Markets don't "argue" over prices. And DCF's don't set valuations based on measured anything. The DCF is there to simply inform the prejudices of market partcipants. The utility of DCfs is simply to get some insight into people's predudices. This is arguably more helpful than simply pretending that any single set of prejudices is more or less {correct, useful, interesting}.