I intend to have online versions of all three courses here, as well as other finance-related videos. The total value of equity will always be maximized at zero debt. Over time, I have compensated for both mistakes, giving Tesla access to a bigger (albeit, still upscale) market and more growth, while reinvesting less than the typical auto company. I teach classes in corporate finance and valuation, primarily to MBAs, but generally to anyone who will listen. My first love is teaching,” he explains. But I just got lucky.”. “I’m a Star Wars fan,” Damodaran tells me by way of explanation for the title. My twitter feeds (almost entirely on valuation/corporate finance) can be found at @Aswath Damodaran. An investor in Tesla should earn a special premium for having to endure news stories about the company that are so unusual that they would be considered fiction at other companies. Missing wages. Damodaran himself has been voted ‘Professor of the Year’ five times by Stern’s graduating MBA class. There is a YouTube playlist for this class, where all class sessions will be loaded. “You can collect all the information in the world, use the best tools, and make your best estimates, but life delivers surprises. That’s certainly one of the reasons, he agrees. Terms and Conditions, Type a minimum of three characters then press UP or DOWN on the keyboard to navigate the autocompleted search results. (“A complete fiction.”). He has posted a full semester’s worth of both classes on YouTube. Aswath Damodaran Aswath Damodaran 1. Yet even this “Dean of Valuation”, as Damodaran is affectionately known, has struggled as much as anyone with the enormity of the impact of the COVID-19 pandemic. I believe that simply applying 30% revenue growth rate in years 1-2 and 20% in years 3-5 is a dramatic oversimplification and an extremely bullish assumption in itself. In fact, it’s the inherently unpredictable nature of business valuation that appeals to him so much. Debt Ratios by Sector, US (January 2018) Debt Ratios by Sector, Global (January 2018) Spreadsheets. As with every Tesla valuation that I have done over the last six years, this one comes with caveats and uncertainties, and the contrasting views that bulls and bears have about the company are captured in the table below: As you can see, I borrow from both sides of this debate, and I am sure that Tesla bulls will be disappointed that I don't have higher revenues for the company and Tesla bears will take issue with my reinvestment assumptions and expectations that the company will eventually deliver solid margins. My name is Aswath Damodaran, and I teach corporate finance and valuation at the Stern School of Business at New York University. 11! Members of CA ANZ are not liable for the debts and liabilities of CA ANZ. It’s the inherently unpredictable nature of business valuation that appeals to Damodaran. He explains that he heard an internal voice speaking to him when he was working as a teacher’s aide (TA) for an MBA class at UCLA in order to make some fast cash. I intend to have online versions of all three courses here, as well as other finance-related videos. Truly, Damodaran speaks without fear or favour. This year marks a turning point, as I find Tesla to be under valued, albeit by only a small fraction. I don’t have a formal financial model but my belief is that Tesla’s maximum quarterly revenue was in the past - Q3 or Q4 last year. Real time figures from Norway on sales of Audi e-tron and Jaguar i-Pace vs Model's X/S are the best examples of that. No comments: Post a Comment. His YouTube videos, on subjects such as “Equity Risk Premiums”, “Acquisition Valuation” and “The Determinants of Betas”, enjoy a staggering 165,000+ subscribers, while his Musings on Markets blog has had more than 17 million page views since 2008. In effect, on an operating basis, the company is in better shape than it was a year ago but on a financial leverage basis, it faces more truncation risk (a chance of failure of 20%). I am willing to accept the argument that Tesla is closer to mastering the autonomous car technology than its competitors, but I see a business that is further in the future than 2023, less dominated by Tesla and much less profitable than ARK is assuming it to be. After this, he headed to the US to complete a second MBA and a PhD, both in finance and both at UCLA. Data. Newer Post Older Post Home. Even if you take the ARK bear case as realistic, with Tesla projected to sell 1.7 million cars in 2023 and earn operating margins close to the auto sector, the pricing per share that you get will be closer to $250/share, with a more realistic share count and time value adjustments, not the $560 that you see on the ARK spreadsheet. As for the bull case, I will leave it untouched, since it strikes me as more fairy tale than valuation, a world where there will be 7.2 autonomous cars on the road in 2023, with Tesla controlling a 70% market share, and generating $52 billion in annual cash flows. The class is 26 sessions long and begins on February 2, 2015 and ends on May 11, 2015. Subscribe To Musings on Markets And when he’s not delivering courses in corporate finance, and equity instruments and markets, Damodaran’s day-to-day involves educating educators. By Aswath Damodaran If a company chooses to pay an employee with options or restricted stock, that action will affect the value of your share of equity in the company, no matter how many contingencies are added to these claims. I think if I wasn’t [sic] listening I’d be a Goldman Sachs banker, or working in private equity somewhere. 2 General Information ... ¨ YouTube Channel : There is a final option, if your broadband connection is not that great and you are watching on a Tablet/smartphone. Simple. Aswath Damodaran! “Most valuation classes are becoming spreadsheet classes, where you’re taught to be an Excel ninja… If all you have are numbers in a spreadsheet it’s not a valuation; it’s numbers in a spreadsheet. No comments: Post a Comment. Make it relevant,” he says. by Aswath Damodaran Describes the process of getting from the value of the operating assets to the value of equity per share (cash, cross holdings and options). There is a YouTube playlist for this class, where all class sessions will be loaded. Hey Aswath, Thanks for your extremely knowledgeable videos! Zobacz inne Pozostałe poradniki, najtańsze i najlepsze oferty, opinie.. “Make students understand why this matters to them, and then they will learn how to use it. “Try to be willing to live with being wrong. “In my session, I use three words: make, it, real. Aswath Damodaran! Valuation Guru Aswath Damodaran has made a wakeup call to those who believe in old-style value investing.The Professor of Finance at Stern School of Business at New York University (NYU) says value investors have got stuck in the 20th century. Q A narrower objective is to maximize stockholder wealth. 2 General Information ... ¨ YouTube Channel : There is a final option, if your broadband connection is not that great and you are watching on a Tablet/smartphone. From Class Rooms to Class Zooms: Teaching during COVID times! That plan was redrawn when COVID-19 intervened, and he will now deliver a keynote address online on the first day. In our past trainings with him all our participants were enthusiastic with the motivating and dynamic method of delivery as well as the personal interaction. My blog posts can be found here. Aswath Damodaran Aswath Damodaran 1. Welcome to the madness :-). Great article. YouTube Video--> Posted by Aswath Damodaran at 3:53 PM. Professor,Half a year gone by and Tesla has shot up from 185 to 440, more than doubling. My name is Aswath Damodaran and I teach corporate finance and valuation at the Stern School of Business at New York University. Finanse korporacyjne. That seems missing from this debate overall (not here in particular just in general it seems). The company's debt overhang, already a concern a year ago, has become a clear and present danger to the company. “Five times as many people watch my YouTube videos as read my blog posts, and my videos are translated into a dozen languages. I teach corporate finance, valuation and investment philosophies at the Stern School of Business at New York University. Debt Ratios by Sector, US (January 2018) Debt Ratios by Sector, Global (January 2018) Spreadsheets. Bringing together everything that has happened at Tesla over the last year, I find myself telling the same story that I told about Tesla a year ago, of a company that would find a pathway to revenues of $100 billion in 2028, with strong operating margins, remains intact, with one notable change. In this simulation, I have assumed that Tesla will remain a stand alone, going concern, and that the equity value could drop to zero, if there is a shock to the value of operating assets, given the debt load. “On all three dimensions accountants have a tough time… They’re so busy entrenching and defending what they’ve already done, it makes a bad valuation even worse.”. The first session is on January 23, 2017 and it will go through May 8, 2017. Professor, thank you for your post. A Do-it-yourself (DIY) Valuation of Tesla: Of Investment Regrets and Disagreements! In fact, I am tempted to add a corporate teenage phase in. “And I believe that you sometimes have to draw on an inner strength to fight your valuation battles… you will suffer losses along the way but a Jedi does not waver.”. I did my first valuation of Tesla in 2013, and undershot the mark, partly because I saw its potential market as luxury cars (smaller), and partly because I under estimated how much it would be able to extract in production from the Fremont plant. I’ve learned things I didn’t know about valuation in just the past nine days. While there are some entanglements (such as the one with Panasonic in the battery factories) that will have to be worked out, there have generally been two impediments on this path. “If I wasn’t teaching valuation, I’d be teaching high school math, and if I wasn’t teaching high school math, I’d be teaching middle school. His YouTube videos on subjects such as “Equity Risk Premiums”, enjoy 165,000+ subscribers. Sovereign&DefaultSpreads:&Two&paths&to&the& same&des=naon…& Aswath Damodaran! “I was able to say this because I really don’t care whether McKinsey invite me back again. Labels: Pricing and Value, Shareholder Value. Along with declining sales, Tesla has been dropping prices, so profitability will take a big hit. “You can never master it [valuation]. “No-one knows the answer to a real-time valuation,” Damodaran tells me. In that post, I also listed possible, perhaps even plausible, scenarios where Tesla's value per share could be higher than $400/share, but argued that it would require the equivalent of a royal flush for the company to get there, a combination of a ten-fold increase in revenues, an operating margin of 12% and reinvesting more like a technology than an automotive company. He teaches the corporate finance and valuation courses in the MBA program as well as occasional short-term classes around the world on both topics. 1! Over decades he has created and helped shaped the field of valuation. I think Tesla mistook the Model 3 back-log demand for a steady-state demand. Posted by Aswath Damodaran at 3:44 PM. I teach classes in corporate finance and valuation, primarily to MBAs, but generally to anyone who will listen. 10! You basically have to accept it is a process. “I remember walking into the first class I ever TA’d, and I knew it was what I wanted to do with the rest of my life,” he says. Thanks for this big fan of your work. YouTube Video. When you say buy shares, do you have a percentage amount you allocate to your portfolio or does it depend by name? If you want to see which chapters map on to which sessions, click here. That will become less of a barrier, as the stock price drops, and at a market cap of less than $15 billion, it could be much more affordable. So what’s his secret to being an award-winning educator? The Federal Reserve's Op... argued that there was no good reason for Tesla to borrow money, arguing that the company is not just earnings positive but cash flow positive, while a plant in China is supposedly set for production late in 2019, unveiled a plan to roll out autonomous taxis, the case with the Tesla/Solar City fairness opinions, Twists and Turns in the Tesla Story: A Boring, Boneheaded Update, The Privatization of Tesla: Stray Tweet or Game Changing News. Anyway, if I am correct and peak sales are in the rear-view mirror, Tesla has a big problem. 10! Thank you Professor for your analysis.I'd like to know how can I perform a simulation analysis like you. So why the multi-pronged promotion? “I’m also being helped by technology,” Damodaran says modestly, as if the rest of us might also enjoy more than 166,000 Twitter followers if only we had access to technology like he does. Sovereign&DefaultSpreads:&Two&paths&to&the& same&des=naon…& Aswath Damodaran! In, If you are wondering how much can happen in a year, you obviously don't follow Tesla, since the company is a magnet for newsworthy events. In spite of these adjustments, I have consistently come up with valuations well below the price, finding the stock to be valued at about half its price only a year ago. It is not my role to be an arbiter of other people's valuations, and I generally avoid commenting on them unless they are in the public domain, as was. Aswath Damodaran is Professor of Finance and David Margolis Teaching Fellow at the Stern School of Business at New York University. YouTube Video. He had also written “A viral market meltdown”, a three-part blog series exploring how the coronavirus had played out in markets. I would be lying if I said that I do not find the company fascinating, and as has been my pattern for the last six years, it is time for a Tesla valuation update.
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