Good morning everybody! We have an important announcement Gary Black about four hours ago in the middle of the night I don't know what he was doing up that late Twitter this tweet Tesla catalyst for February 15 2023 and he goes through all of this. But the bottom line here I want you to pay attention to is that 370 dollar Target price for the next six to 12 months 370 dollars Now obviously he's talking about investor day, the EV credit, the deliveries, the FSD the mega pack, the buyback that hasn't been confirmed yet and I don't think it's happening. The Twitter Co announcement that cyber truck which is also questionable when the compact car which has not been announced yet. there's a lot of Wishful Thinking here.

There's a lot of good information here. Good Catalyst here but this is just an estimate. So 370 dollars currently the share price is about 209 210 dollars For the past month the Tesla Q have not had a good month. Let's put it this way, you know how they say about basketball Shooters well he didn't have a good day I Think this the queue did not have a good career anyway.

So the question is, how legitimate is this price? can we do anything with it 370 based on Gary Black can and we stress test this and I would say yes we can and we will. So let's do it right now. let's check how much this is true. Let's do a or legit test on Gary Black's 370 Target price.

So the first thing we want to take a look at obviously we will use stock MVP for this. Now the first thing we want to use is actually look at what other analysts are saying I Just want to remind you Gary black is saying 370 dollars. This is the stock MVP Analyst chart it Aggregates all the analysts that are basically covering Tesla Just to show you the different Target prices, you have the low Target price another 26 dollars right Here you have the high Target price 526 dollars right here. But mainly what's important is that you have the average analyst Target price here which is 327 dollars.

So Gary Black is above that but not miles above it. Obviously they all give it a plus five, five, strong, buy, etc. etc. But the average analyst Target price here is 327 which is very close to Gary Gary is above it.

But I mean it's not out of the realm of the current coverage of analyst. But then again, analysts in general is just one thing to look at. They get it wrong a lot and somebody who got it wrong a lot myself volunteer I'm just kidding I Love volunteer I Mean it's just one thing to look at. Now let's move on to a little bit more of a I would say objective data here.

Let's take a look at this thing here. So this thing here before we will run the full DCF We will run the full evaluation model I'll tell you my Target price in a second I will I promise. But the first thing, you have to understand what's under the hood of the company. You have to understand the fundamentals of the company.

That's really important. And also it's important because that's the one thing I don't like about. Um I guess other tools I used to use in the past is you look at fundamentals. you can't see the history.

It really like it's a struggle to go back and look what the trend is now on stock. We built it so it can actually see the history. So for example, revenues for test is 81.5 billion dollars. But if you look at revenues just five years ago, there were 12 billion dollars.

So clearly you can see the trend here right. From 12 billion to 81 billion in five years, it's 600 up and actually listed here. So you can see that the revenues are more than impressive. The growth for the past year was 51 percent.

That's important. Remember that number 51. The growth number is going to be a huge huge element of our valuation. Not the solar element, but a huge element now selling and general expenses.

Basically, this is what I call the fat. This is the this is usually where you can trim the most cost if you really were adamant about it. Now, as revenues grew 600 of the past five years, SG A grew about 60 percent over the past five years. So you can see here that this company is generating 600 more sales with only 60 growth in this.

GNA In fact, their SG A have dropped 12 and a half percent the cost drop over the past year when they grew 50 sales by 12 percent. Again, these are really impressive numbers. Now on the operating expensive side, which is where you aggregate all the things that you have to do to generate these revenues including Sgna. By the way, it's up 1.2 percent of the past year.

So let me just be clear. so Tesla increase operating expenses by 1.2 percent and increase sales by 51.35 I mean you can't find a lot of companies that can give you numbers like that over the past five years. Again, Opex is up. Operating expenses are 86 percent versus a 600 increase in Revenue I Think the efficiency question here is answered.

It's an extremely efficient company with video game level numbers. I Mean this is insane. This is like playing railroad Tycoon on easy mode. Um, now one important thing here is looking at the increase in ebitda.

increase in ebitda is super important for our DCF coming up in a second. We have a DCF calculator here on stock MVP which we'll use in just a second. So Evita is at 17.5 billion dollars which is in self-summing is about to make my brain explode. I mean 17 billion in Ibida.

And by the way, Ebitda is pretty much how much the company is making before the accountant start finagling the numbers. So ebitda is where I think it's the most important part. but net income is also important. basically.

EB That Grew 85 percent of past year. so 85 percent ebitda growth is where we at now in DCF we'll use that number. We're actually bring it down a little bit to be more conservative. Now look at this.

This is video game numbers. growth over the past five years is a ten thousand percent. So people talk about Tesla as a meme. stock as a hype stock retail stock my guy.

If you're heading on Tesla it's a 10 000 increase in EBT over the past five years. I Mean that's video game numbers. So 17.5 billion of Ibiza net income is 12.6 billion dollars. Again, 660 net income increase over the past five years.

That's insane with Opex up only 86. So imagine increasing operating expenses by 80 and then increasing net income. Which is the absolute bottom line with my 660 Absolutely insane Capital Expenditures are not small for a company like Tesla Mind you, the Supercharger network is a super Capital intensive business. So seven billion dollars.

It's a lot of capex, but it's going to building that mode. By the way, the White House is all gone home about eliminating that mode and having test open it up for the public. But guess what? That's what Tesla actually wants because it's going to generate Tesla a lot more money. But that's a whole different video.

So basically we have Capex here at 7.2 billion. Growth of the past year is 10, so we're gonna use that 10 Again Capex growth. You remember that number 10? We're going to use it for our DCF free cash flow. Oh my goodness.

7.6 billion 117 increase in free cash for the past year 282 increase in free cash flow. Over the past five years, you started to see the trend here. This is a very impressive company financially from a fundamental standpoint, not of a hype, not of a price action. Um, cash is 16.3 billion.

Again, super impressive here. Total debt. It says here: 3 billion. But let's okay.

let's say three. Screw it. Let's say three. Although we can argue about that three.

Basically more than four times more cash than debt. They can literally repay the debt right now. be with zero debt and 13 billion in cash. So this is pretty much this is a wash.

A liability is 37 billion assets 82 billion. So double literally double um, than assets and liabilities. I Mean this is absolutely insane. Okay, so the next thing we have to do is run a proper DCF discounted cash flow valuation of Tesla based on its current numbers.

Now we have here on stock MVP DCF calculator. So you don't have to basically screw around with an Excel spreadsheet and you'll break your fingers trying to figure out how to do it. Everything is here. In fact, you can automate the whole process just by clicking, populate and calculate.

You can also manually change all of these things. But basically in this example, we'll just use the auto populate feature. So as you saw earlier, ebitda growth may I remind you was way way higher than 10. Let's go back to the cards and let's see so in the cards, ebitda growth was 80 five percent year over year, eighty five percent.

So in our example, we'll just use fifty percent. Well, let's just use fifty percent, which is way below 85 just to be cautious. Now a capex growth was ten percent. Let's keep it 10 depression of a decision.

You can also do ten percent and we're going to do populate. And then we go: Long-term growth rate: four percent discount rate ten percent calculate. Now we scroll up and we find out what's going on. So basically the DCF valuation we just got is 447 dollars for this company 447 which means it's undervalued by 113 and 81 cents.

Now we can actually make this a little bit tougher. You can do sensitivity analysis on these DCF models. We have a stock MVP and you can do 12 discount rate which means the stock will be cheaper. Basically let's say interest rates are going up so you want to have a higher discount rate to reflect more risk.

Fine calculate. Okay, now we're getting 323 dollars Basically the exact number all the analysts are getting. So now we know where the majority of the analysts are. The majority of the analysts are basically saying hey, this is a 50 growth rate on Ibida and basically at 12 discount rate four percent Perpetual rate So this is why if you go back to analyst then you see that on the other side.

Three: 327 327 We just got what we just got: 323. So now you know that the analysts are basically here. That's why this is the average price because this is what Tesla is actually worth now. Gary Black is saying 370 which means he either bits on the discount rate will be lower because of lower interest rates or he thinks that the growth rate is going to be higher So we can do that.

We can live 12 and we can put 60 percent and maybe the growth rate which is still below what they're actually growing at and then you get 450. So Gary Breck is probably in that area as well. Now beyond the DCF you want to have another kind of built and suspender system. This is another tool we have called the SCF CEF tool.

You can actually evaluate the stock here by a multitude of elements. As you can see they're on the screen right here I've already populated it. Basically, it has conservative valuations, optimistic valuations, and current valuation. And then you get the five year Target price and you get the bear case, the medium case, and the optimistic case.

I've already populated. Here on the screen, you can see Revenue growth. Everything is actually on the conservative side below the current numbers. On the optimistic side, it's right about the current numbers, give or take.

So this is what we get. and I actually did this just a second ago I Don't want you to be waiting for me to fill this out. it's on the screen. You can pause it and look at it in a second.

Basically, what I'm getting is for the five-year conservative, which means way below the current numbers. four hundred dollars per share, which is an 89 90 Upside for five years at the bear case, at the medium case, 809 at the optimistic case 1200 which is an 840 percent. On the upside. Now look, these are insane numbers and you might say, well, Tom this is super expensive I mean how can you say 1200? So look Peter Lynch Talked about it multiple times.

Great companies. You probably have like 20 years to buy into them and still make a hell of a lot of money. I'm not saying 480, but I'm saying like, if this is a generational company, they're actually going to do what. Gary Black says at least half the stuff he's saying here.

they're worth 300, no doubt about it. I think Gary Black is definitely based on our little test here on stock. MVP has a good point and to acknowledge the fact that we just had the first time in history Gap Profibility by palantir yesterday I'm willing to give you a 50 for Life For Life on stock MVP Use the code pltr50 pltr 50 Get a 50 off to you stock MVP If you don't like it for any reason, let me know. I'll refund you no problem I Love that software that much! Check it out as always! Thank you so much! See you next video.