A Do-It-Yourself (DIY) Valuation of Tesla Inc (TSLA): Of Investment Regrets and Disagreements!

In the rest of this post, rather than force my story on your, I would like you to make your choices on the growth, profitability, investment and risk dimensions future for Tesla Inc (NASDAQ: TSLA), and just in case you need some help, I will offer data perspective, on each of those choices.

To make your judgment on how much revenue Tesla will have in a decade, it may help to take a look at the overall auto business. In 2019, the collective revenues of all publicly traded auto companies in the world was about $2.46 trillion and the the compounded average growth rate in those revenues over the last decade has been about 3.5%:

Put simply, this is a big market, but the overall market is in slow growth. To provide some perspective on what the bigger auto companies generate in revenues, I have listed the 20 largest auto companies, in terms of revenues in the table below:

Tesla does make the list, coming in at the very bottom of the list, and its compounded annual growth rate between 2010 and 2019 stands out, partly the base revenues for the company, in 2010, were tiny. Since one of the Tesla stories told by optimistic is that it is a tech company, It may help in your estimation to see what large tech companies look like, and to make this assessment, I decided to focus on the giants on top of the tech heap in the FAANG stocks, with Microsoft thrown in for full measure:

Note that while the tech companies are substantially more profitable than the auto companies, in terms of margins and dollar operating income, their revenues tend to be more muted, reflecting the pricing of their products and services. Apple, the largest market cap company in the world, had revenues of $ 260 billion in 2019, and Microsoft, the largest software company in the world, by far, had revenues of $129 billion, and both companies lagged Toyota and Volkswagen, on total revenues.
 
With this background, I think that you have the ammunition you need to make your own revenue judgments for Tesla in a decade, differentiating your story from mine, where revenues in 2030 for Tesla are roughly $125 billion. So, with no further ado, here are your choices (pick one):

Since Tesla’s revenue stream includes not just autos but also software, batteries and solar panels, your story may augment revenues to reflect these, but remember that these streams cannot deliver the same revenue heft as selling cars, though they may be more profitable. In addition, be cautious about growth rates, since it is almost impossible to grasp the compounding effect, without looking at the dollar values. For instance, there are some who take Elon Musk at his word that he plans to grow Tesla at 50%-100% a year; applying a 50% growth rate to Tesla’s revenues would give it $470 billion in revenues, which would make it second only to Walmart on a global basis. With 100% growth, Tesla’s revenues would be around $4 trillion in 2030, and if you can find a way to get there, good luck to you!