Application and Feasibility Analysis of DCF Model in Corporate Valuation: A Case Study of Tesla, Inc.

DOI

10.2991/978-94-6463-052-7_114How to use a DOI?

Keywords

Tesla; Corporate Valuation; Capital; Discounted Cash Flow (DCF); Weighted Average Cost of Capital (WACC); Capital Asset Pricing Model (CAPM)

Abstract

Although in the past two years, the COVID-19 pandemic and the resulting rise in global raw materials and labor costs have had a more serious adverse impact on the entire automotive industry, the new energy vehicle industry has shown a strong momentum of development in the past two years, with significant improvement in both the scale and speed of development. Therefore, given the rapid growth of the electric vehicle industry in the past two years, it is necessary to evaluate companies in some related fields from the aspects of business scope and development policies in early 2022 to rejudge the value they can generate in the future. This paper adopts the Discounted Cash Flow (DCF) model, a classical capital pricing model, to discount all cash flows of Tesla in the future, thus obtaining the current corporate value of Tesla. It turns out that the final estimation of Tesla’s enterprise value is about $900 billion. Compared with the public valuation of Tesla, there is a risk that the corporate value of Tesla may be overvalued by the public. Through analysis, it can be concluded that although the DCF valuation model has certain inevitable restrictions, it is still practical to evaluate large-scale companies. For the future development of new energy electric vehicles, although the far-reaching impact of the epidemic may continue for several more years, it can be argued that the development potential of the electric vehicle industry cannot be underrated, especially for new energy electric vehicle companies represented by Tesla.

Copyright

© 2022 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Jiayi Pan
PY  - 2022
DA  - 2022/12/27
TI  - Application and Feasibility Analysis of DCF Model in Corporate Valuation: A Case Study of Tesla, Inc.
BT  - Proceedings of the 2022 International Conference on Economics, Smart Finance and Contemporary Trade (ESFCT 2022)
PB  - Atlantis Press
SP  - 1005
EP  - 1023
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-052-7_114
DO  - 10.2991/978-94-6463-052-7_114
ID  - Pan2022
ER  -