Max Grigoryev
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Max Grigoryev in Fundamentality,

Tesla and competitors

Tesla's stock is really hot now. The company becomes more and more popular. There are lots of information and analysis of the business model, but I want to share my thoughts about the competition and trading multiples. 

The question about the competitors and competition is very difficult especially for Tesla. As soon as Tesla is the leader of manufacturing electric cars. The main point for this analysis is that I suppose that the automotive market is fairly valued right now. This is the key assumption. As soon as all the companies from the automotive field will come to the manufacturing electric card and provide the auto-pilot in the cars. 

The key point that I wanted to analyze was the Enterprise value of the company. I chose more than 20 companies - all leading car manufacturers from all over the world and got an interesting graph of Implied Enterprise Value:

Source: data provided by CapitalIQ

As we can see from the chart, Implied Enterprise Value of the companies from automotive industry according to different multiples. I would like to note that the latest Tesla's Enterprise Value was around $31B. According to different multiples, we can see that the potential Enterprise of Tesla should be higher, especially if we take into consideration EBITDA and EBIT multiples. However, most likely, Tesla is going to have negative EBITDA and EBIT this year. 

So the chart gives the feeling that Tesla is undervalued. Over the last several weeks I read several articles about why Tesla is overvalued. Different analysts say that competitors are doing the great job with electric cars and shows some examples of such competition

What do you think about Tesla's stock? Do you think that BMW, Audi or Mercedes can succeed in this field?