In subsequent years, the company grew, with multiple rounds of funding from venture capital. Our comments are an expression of opinion. According to his research, Tesla seemed to have an unassailable talent and technology lead, and the stock should be worth a lot more than $300. At the site level, Megapack requires 40% less space and 10x fewer parts than current systems on the market. This is also why Aswath Damodaran's valuation of $650 per share based on today's numbers seems reasonable, but using his approach to extrapolate to 2030 would severely underestimate Tesla's potential. The promise is that once cars can drive themselves, a fleet of so-called robotaxis will become one of the main modes of transportation, because this will be much cheaper than either owning a car or taking a regular taxi with a human driver. I spent the first week of 2021 in the same way that I have spent the first week of every year since 1995, collecting data on publicly traded... As we approach the turn of the calendar year, I have my own set of rituals that prepare me for the new year. It further seems possible that Tesla's energy business will have reached a size comparable to that of their car division by 2030, as Musk expects. After all, the ride sharing companies have doubled or even tripled the size of the car service business in the last decade, using this template. The time line below captures some (but not all) of the highlights in Airbnb’s history: Airbnb's primary business model connects hosts who own houses and apartments with guests who want to rent them for short term stays, while providing a secure and easy-to-use platform for search, reservations, communications and payments. Tesla has a head start of a few years, and this cannot simply be undone by throwing money at it. Last week, was my data week, wh... What is a hurdle rate for a business? Likely even more than that, as Musk plans to 50X the current output from its Gigafactories. The hotel business is both large and diverse, composed of hotels that range the spectrum from luxury to budget. One top-notch engineer is worth "300 times or more than the average," explains Alan Eustace, a Google vice president of engineering. Today, in 2020, Tesla has achieved all of the milestones it set in its 2006 Master Plan: They are also well on their way to achieve their goals set in Elon Musk's Master Plan, Part Deux: It is worth noting that the first item on Musk's latest Master Plan is not about cars. Individual investors and social media contributed to pressuring Tesla skeptics to give up on those bets last year, according to Aswath Damodaran, a professor at ⦠I describe myself as a teacher first, who also happens to love untangling the puzzles of corporate finance and valuation, and writing about my experiences. Sounding good or Doing good? So Tesla today has the most powerful self-driving chip in the world, as well as a gigantic data lead, making it very likely that they will be the first company to solve level 5 autonomy. Let's finish with a quote from Charlie Munger when asked about Musk: I would never buy [Tesla], and I would never sell it short. Put simply, rather than operate under the delusion that it is value that drive decisions, it is healthier to recognize that bankers price IPOs, not value them, for the offering, that much of the trading on the offering day and the weeks thereafter is driven by traders, trying to gauge mood and momentum. The Cybertruck might look weird to many, but the reason for the stainless steel body is that it doesn't need a paint job, creating enormous savings in production time and costs. Today, Tesla is not able to produce enough cars to meet demand, but they will build Gigafactories as fast as they can make them the next few years to close this gap. They vowed to cover "all forms of terrestrial transport", leaving the terrestrial transport up to Musk's other highly successful company, SpaceX. Cerca nel più grande indice di testi integrali mai esistito. I teach classes in corporate finance and valuation, primarily to MBAs, but generally to anyone who will listen. In the table below, I look at the revenues and operating income at these companies in 2019 and the last 12 months: While Expedia and Booking.com both generate revenues from operating as middlemen between travelers and hospitality providers, just like Airbnb does, there are two key differences: To value Airbnb, I will follow a familiar script, at least for me. There are some who believe that the conventional hotel market understates the potential market for a sharing economy company like Airbnb, since it can increase the supply of rental units without major new investment, and perhaps induce new entrants into the business. About Me. In the graph to the right, you can see the effects on the financials, in a comparison of first nine months of 2019 to the first nine months of 2020, with gross bookings dropping 39% and operating losses almost tripling over the period. Even software-like margins seem possible once full self-driving is released, from robotaxi fees, Autobidder fees, as well as an in-car app store for entertainment purposes, since the driver no longer has to pay attention to the road and has this big, beautiful screen in front of him. And these batteries, which are also used in their cars, are not just any batteries, they are the most efficient batteries in the world at the moment: Tesla is dominating when it comes to battery tech, and there are more improvements coming now that they are building their own battery R&D labs and production lines. The Price-Value Feedback Loop: A Look at GME and AMC! Read the latest in-depth cryptocurrency market analysis and opinion on leading cryptocurrencies including Bitcoin, Ethereum, Litecoin, Ripple and ICOs. To make a judgment on Airbnb's future, we need to understand two peer groups. All of this information led me to purchase more TSLA shares during the COVID downturn in March, even though I normally only buy stocks from companies that have shown years of above average profitability. Stock information might be delayed by as much as 20 minutes. That is why my $450 average purchase price seemed very reasonable to me, even if only a fraction of that future valuation is ever reached. Across all sectors of the market, Professor Damodaran found that the average return on equity is 12.25%. I was hoping to move on from Tesla to my data update posts, but my last post on Tesla drew some attention, in good and bad ways, partly be... On Monday, November 16, Airbnb filed it’s preliminary prospectus with the SEC, starting the clock on its long awaited initial public offering. And then, there are those who are either media shy or are too busy on Dalal Street to talk to the media. Self-made millionaire Steven Mark Ryan, from the Solving the Money Problem YouTube channel I mentioned earlier, has been researching Tesla in-depth since 2016, and with some back-of-the-napkin math, he roughly estimates a $5 trillion market cap by 2030 is possible. He says he would rather lose an entire incoming class of engineering graduates than one exceptional technologist. Data Update 3 for 2021: Currencies, Commodities, Collectibles and Cryptos. While the concept was heavily promoted, it has been slow to take off, with only $10 million in sales in 2017, but Airbnb has not given up, hiring Catherine Powell, a Disney theme park executive in 2020, to revamp the business. I think that, based on the thorough research from some very smart people, as well as my own research, a $2 trillion dollar market cap by 2030 seems plausible. The second is the market pricing of publicly traded companies in the peer groups, companies that investors will compare the company to, in setting prices. investors consistently grow their wealth. In 2016, when the second Master Plan was written, Tesla had only launched the Model S sedan and Model X mid-size SUV. Besides, all competitors are using LIDAR technology, which is bulky, and cannot distinguish a rock from cotton candy. Since then, I watched every single one of his videos, which taken together paint a very clear and nearly inevitable path to extreme profitability for Tesla in the coming decade. Same for the right angles of the body; much easier to produce than smooth curves. The author cannot be held responsible for any loss or damage arising from the use of this website or any of the tools containing the name Value Spreadsheet. The first is the VC pricing of the company in the rounds leading into the public offering. Then there is the gigantic die-casting machine Tesla patented in 2018, which today allows them to create a car body out of just 2 parts (eventually just 1), whereas the body of a traditional car consists of no less than 75 individual parts!! It is about solar roofs and battery storage. It sold over 10 times more than the second most popular electric vehicle (which was the Model X...), It was the safest car EVER TESTED (followed by the Model S and Model X...). A lot of their focus is in fact on energy products, which Elon Musk expects will be worth as much, if not more, than their entire car division at some point. Once the virus made its presence felt elsewhere, in February and March, countries responded with partial and full economic shut downs that hurt all businesses. I will complete the valuation by looking at its sensitivity to key value drivers and bring in uncertainty into the equation. MBA & Executive Classes Starting in the fall of 2001, Aswath Damodaran's corporate finance and equity classes have been web cast. The per share value based upon the latest share count is about $54/share. In this article, I explain why I, as a hardcore value investor, invested a large part of my portfolio in Tesla stock, and why I believe the company will be worth TRILLIONS by 2030. Then, the #1 investor in the private investment club I'm in started talking about his research into Tesla, and he made some very intriguing points. Autonomous vehicles, also referred to as full self-driving or level 5 autonomy, will revolutionize transport as we know it. Nick is a value investing expert, serial entrepreneur, educator, blogger and public speaker who helps other investors to consistently grow their wealth using a simple, low-risk, time-tested value investing strategy. I consider this a special situation that is too good to pass up, and so I made an exception for Tesla. Negative Rates And The Bank Of England By Marc Chandler - Feb 04, 2021. With these inputs, my valuation of Airbnb is captured in the picture below: The value that I derive for Airbnb, with my story and inputs, is about $36 billion, with $3 billion in expected proceeds from the IPO augmenting the value and netting out the value of options outstanding. Tesla saw the need to develop this chip themselves, as off-the-shelf products like Nvidia's AI chips used way too much power, and were not optimized for computer vision tasks. That is because there are parts of the world, where the Airbnb model will be less successful than it has been in the United States, either because of consumer behavior or regulatory restrictions. On the same day, rising COVID cases caused more shut downs and restrictions around the world, creating a clear disconnect. While the US remains the largest market, geographically, Asia is the center of growth, with China leading the way. Today, Tesla cars that have Autopilot enabled are already about 10 times less likely to get into an accident than the US national average! The proof of a business is in the numbers, and Airbnb, in addition to posting impressive numbers on hosts, listings and guest nights, has also seen financial results from that growth. The Storming of the Bastille: The Reddit Crowd targets the Hedge Funds! In the coming weeks, Airbnb will update its prospectus to reflect more details on its IPO, and bankers will set an offering price per share, based primarily on the feedback that they get from potential investors to different I may be jumping the gun here, but given how well the market has treated capital-light and technology companies this year, I would not be surprised if the market attaches a pricing of all above my estimated value for Airbnb's equity. There are two ways in which I can describe Airbnb's total addressable market. All of this is made possible thanks to Tesla's in-house developed Full Self-Driving Computer, also called Hardware 3. In this post, I will argue that there are good reasons for Airbnb's IPO timing, and make my first attempt at valuing this latest entrant into public markets. Normally, when we value investors try to determine the value of a company, we use something like a Discounted Cash Flow model. P.S. However, this only really gives a reasonably accurate result if a company has stable, predictable earnings. To get a more realistic pricing, I apply the multiples to Airbnb’s expected values for these metrics in 2025, and then discounting the future values back to today. I'm a value investing expert, serial entrepreneur, and educator. A file photo of SpaceX owner and Tesla CEO Elon Musk. Note that, at least through the most recent years, there is little evidence of economies of scale, since the direct operating costs have stayed at between 40-42% of revenues and the other costs have, for the most part, been rising. In its prospectus, driven partially by its past success, and partly by the need to justify a large market cap, Airbnb has expanded its estimate of market potential to $3.4 trillion, as evidenced in this excerpt from the prospectus: The conventional hotel business is an asset-heavy business, with a significant real estate component to its value, and while some hotel companies have stayed with that model, others have moved on to a more capital-light model, where the real estate is owned by a separate entity (both in terms of ownership and control) and the hotel companies operates primarily as an operator. Then click one of the share buttons now to help me spread this information. purchasing billions of $ worth of ZEV credits from Tesla, 10 times less likely to get into an accident, How to Calculate Intrinsic Value (DCF & More), How to Find Undervalued Stocks in 3 Simple Steps, Lessons from Rich Dad, Poor Dad (summary), How to Determine a Realistic Growth Rate for a Company, The 20 Funniest Goldman Sachs Elevator Gossips, Use that money to build an affordable car (Tesla Model S), Use that money to build an even more affordable car (Tesla Model 3), While doing above, also provide zero emission electric power generation options (Solar Roof), Create stunning solar roofs with seamlessly integrated battery storage, Expand the electric vehicle product line to address all major forms of terrestrial transport, Develop a self-driving capability that is 10X safer than manual via massive fleet learning, Enable your car to make money for you when you aren't using it, Customers earning money with their Tesla products.
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