Tesla stock is easily the most controversial stock in the entire stock market. Some analysts think that tesla stock is worth 17 today, whereas others believe that tesla will be worth at least three thousand dollars by 2025.. Elon musk recently told his employees that if tesla executes really well, then he agrees with ark's price target for tesla of up to four thousand dollars per share. So with all of this controversy surrounding tesla stock, it's difficult to find the actual intrinsic value for tesla stock.

I've personally created over 130 videos on tesla's business fundamentals, all of which cover every aspect and argument about tesla. I will be projecting a 4k simulation model to calculate a fair value for tesla stock. Today, by the end of this video, all four of my projected cases will be used to estimate an intrinsic value for tesla stock. These cases will include all qualitative and quantitative attributes that will help us investors determine the real value for tesla.

The perfect case assumes that tesla ramps up its vehicles in a perfect fashion, giga, berlin and giga texas, both start small scale production in 2021 and ramp up in the following years. Tesla's production timeline also starts early as the tesla roadster, cybertruck and semi all start small scale production in 2021 by 2024, the 25 thousand dollar tesla starts production as well. Most importantly, full self driving is solved in the perfect case scenario by 2023. Full self driving passes human capabilities and by 2025 tesla gains government approval for a robo-taxi network to top it off tesla insurance, tesla, superchargers and tesla energy all scale worldwide.

The tesla bot prototype is also released in 2022, but only starts production in 2026. I estimated that this scenario has a 5 chance of occurring, which will be very important soon in the bull case. The main difference is that full self driving passes human capabilities by 2025.. As a result, tesla never gains government approval for full autonomy.

Another difference is that the roadster and the 25 000 tesla are delayed by one year compared to the perfect case. The tesla bot prototype is also delayed by one year as well and only goes into production by 2028, which will not be included in this model. My valuation model will project all the possible scenarios for tesla's business until 2026.. I estimated that this bull case has a 25 chance of occurring in the base case.

I assume that giga, berlin and giga texas will start small scale production in 2022 because of this, the projection for tesla's production timeline was also slightly delayed by one year. This scenario also assumes that tesla's, full self-driving software passes human capabilities by 2026. Additionally, i estimated that tesla insurance, superchargers and energy all ramped up at a normal pace. Another difference in this scenario is that the tesla bot prototype was estimated to be released in 2024 and only went into production after this valuation model.

I gave this base case a 45 chance of happening. Lastly, the beer case is what every tesla short seller wants. A massive battery shortage that lays production for giga, berlin and giga texas all the way back to 2023. This affects the production timeline as well, which is delayed by one year compared to the base case.

Full self-driving also improves at an extremely slow pace. It never passes. Human capabilities, tesla insurance, superchargers and energy also garner very little traction because of a shortage in raw materials for tesla's vehicles and batteries. Finally, the tesla bot fails miserably in the bare case, as tesla manages, to create a prototype by 2025.

I estimated that the bare case has a 25 chance of occurring. Everything we just talked about was mostly qualitative, but in order to find the intrinsic value for tesla, actual quantities are required. In this spreadsheet i estimated and calculated the future potential of tesla's business. In every scenario, to start with vehicle deliveries, i projected a wide range of vehicles sold in each scenario.

In the bare case, tesla's production capacity only increased at 3.1 million vehicles by 2026. This is a major difference compared to the perfect case, where tesla delivered over 9 million vehicles by 2026.. These delivery numbers are based on a range of growth rates, which range from case to case. You can see how the growth rates trend downwards over time.

This was done under the assumption that it would become more difficult for tesla to ramp up at a larger scale of production. The vehicle projections that you just saw were based on tesla's estimated production timeline for new and existing vehicles, which i estimated within each scenario. In the perfect case, model y production already reached its highest percentage by 2022. from 2022 to 2024.

The cyber truck spirit had a tesla's growth. By 2024, the 25 thousand dollar tesla began its production ramp up. I used a similar trajectory for the bull case, but with a slower overall production ramp up. For example, the cyber truck began production by 2021, but did not reach its maximum percentage until 2025..

The 25 thousand 000 tesla also had a slower ramp up compared to the perfect case. In the base case, i assumes that an even slower ramp up occurred than the bull case. The bear case assumes that a massive battery shortage occurred as a result, estimated vehicle production slowed down substantially using the percentages that we just talked about. I calculated tesla's average selling price per vehicle over time.

Each case's trajectory varied based on how quickly tesla's new vehicles were ramped up. The next component was full self-driving. At the beginning of this video, we went over how each case had different estimated improvement rates for fsd. These qualitative attributes were translated into an estimated percentage of vehicles sold with fsd over time.

I also translated the improvements in fsd to estimate the price of fsd over time in the perfect case, full self driving reached full autonomy, which led the price of fsd to reach 25 000 by 2026. On the other hand, in the bayer case, the price of fsd only reached 16 000 by 2026., based on the projections that we just went over, i calculated tesla's estimated vehicle revenue up until 2026.. All of tesla's vehicles need to be insured, which is where tesla insurance comes into play. Tesla plans to dominate the insurance industry with its own insurance product data is practically gold in the insurance world and tesla has the most data about its vehicles.

Tesla insurance is currently available in a limited number of states, but is quickly expanding across the u.s tesla insurance has done quite well so far, as demonstrated in this graph. I projected the rate of expansion in tesla insurance by estimating the percentage of tesla vehicles. That would be insured, then i projected tesla's revenue per insured car using relatively conservative numbers. These two estimates were then used to calculate the total revenue for tesla insurance.

The next key segment for tesla is tesla energy. The products in tesla energy include the tesla powerwall mega pack, solar panels and solar roof. The tesla power wall is a battery system for homes that cost 10 500 after insulation. This is a popular product for people with solar panels that want to store their energy.

For short periods of time, the tesla mega pack is a larger version of the powerwall and is primarily used by utility companies. Both of these products are reportedly sold out for quite a while. Tesla offers the cheapest solar panels in the industry and guarantees this with its price match policy. Tesla energy is still in its early stages.

As a result, my revenue projections varied a lot from case the case. In the perfect case, the annual revenue for tesla energy reached 40 billion dollars in 2026. The growth of tesla energy ultimately depends on whether supply chains can successfully ramp up production. If there are enough batteries in raw materials, then prices in this sector will continue the fall and drive more demand in the case of a raw material shortage.

Tesla energy would likely be put aside, as we saw tesla do this during the model 3 ramp up. The next segment i included in this model is a tesla supercharger network. Elon musk recently stated that he wants a tesla supercharger network to grow at the same pace as tesla's vehicle segment. Many investors overlook superchargers as a potential revenue stream, but it's becoming clear that the network has humongous potential by opening up tesla superchargers to all vehicles.

Elon musk will single-handedly create a massive revenue stream. That's right! Even non-tesla vehicles will soon be able to charge at tesla. Superchargers, in order to start conservative, i projected that the tesla supercharger network would go at a slower pace than tesla's vehicle segment. As you can see in this graph, i estimated that the growth of the supercharger network would be correlated to vehicle growth rates, because tesla vehicles need superchargers to charge at.

I then estimated the number of cars that would charge at each supercharger station per day, using the estimations that we discussed. I projected tesla's revenue growth for the supercharger network over the next five years. Even in the perfect case, the tesla supercharger network still generated a very small amount of revenue compared to tesla's overall revenue. Now i had to project arguably the most controversial segment of tesla, which is tesla's regulatory credit revenue, contrary to what most people think most of tesla's regulatory credits do not come from the us government.

This segment of revenue actually comes from other automakers legacy. Ottawa struggled to keep its carbon emissions down and transition to evs in order to meet government requirements. Many legacy automakers have signed deals with tesla to average out their overall carbon emissions. For example, tesla signed a deal worth up to two billion dollars with fiat chrysler in 2019.

I also included other forms of revenue for this segment, such as tesla's profits from selling bitcoin and tesla service stores. The growth of regulatory credits ultimately depends on other automakers, so i went with very conservative estimates. I don't see this segment growing much unless, if bitcoin reaches 200 000 per coin, which is definitely speculative as you can see, with my estimated growth rates, i actually projected negative growth rates in this segment. This was primarily done to stay conservative with my numbers.

The next portion of tesla's revenue is much more speculative, which is the tesla bot. As you can see in these revenue projections, i only included the tesla bot in the perfect case scenario, and even in the perfect case, the tesla bot still represented a small portion of revenue. The last portion of tesla's projected revenue is very speculative, which is the tesla robo taxi network. I only included the robo taxi network in the perfect case scenario by 2026 i estimated that 10 of tesla's new vehicles would join the robo taxi network if full autonomy was achieved.

I then estimated that each robo taxi would make 150 dollars of revenue per day using those assumptions i calculated tesla's estimated robo taxi network revenue over time, because this is speculative. I only included it in the perfect case by adding up all of tesla's revenue segments. I calculated tesla's overall revenue over time in the perfect case, tesla's annual revenue reached over 600 billion dollars in 2026 in order to find an intrinsic valuation for tesla. I projected tesla's future margins over the next five years through the economies of scale, improving fsd software and better technology, tesla's gross margin increased over time.

In every scenario, i estimated that tesla's profit margins would also increase over time. In the perfect case, tesla's profit margins increased. All the way to 22 much higher than the bear case, estimate of a 12 profit margin by 2026. Using these projected profit margins.

I calculated tesla's total profit over time because of the power of compound interest. You can see how tesla's estimated profit grew exponentially. Now we have to cover the most important part of this video, which is tesla's valuation. I estimated the trajectory of tesla's future pde ratio by using declining numbers in the base case.

Tesla's estimated pde ratio decreased all the way down from 1 000 in 2020 to 32.5. By 2026, i believe that a premium valuation is reasonable, considering that tesla has incredibly strong tailwinds over the next decade. In addition to the pde ratio, i also determines tesla's future price to sales ratio or p to s ratio, in short form. To put this into context.

Apple currently has a pds ratio of 7.5 and apple does not have a 10 000 software products like tesla, using my projections for tesla's future pde ratio, i calculated a fair value for tesla's market cap over time, as demonstrated in this graph. Tesla's estimated valuation did not increase by a significant amount until 2024-2026. This is reasonable for growing companies that are investing for the long term. After that, i used the same strategy for tesla's p2s-based market cap.

You can see how tesla's valuation started a lot higher. This is because tesla is investing most of its earnings for future sales growth. By taking the average of these two estimations for tesla's market cap, i calculated tesla's final estimated market capitalization over time. Subsequently, i translated tesla's market cap to tesla's estimated stock price over time by 2026.

Tesla's share price in the perfect case reached 4 847 dollars per share in the bare case. Tesla's share price would only be 736 dollars by 2026. In other words, tesla's share price is expected to stay flat in the bare case. By discounting these growth weights by 15 per year, i calculated an intrinsic value for tesla stock.

In the base case, i calculated that tesla's intrinsic value today is 743 dollars per share. This means that, in the base case, tesla stock is trading at a fair value right now, all of these estimations are useless. If we don't calculate the probabilities of each scenario happening in order to calculate an estimated intrinsic value. I use the following probability: numbers for each scenario.

My final price target for tesla stock by 2026 is roughly 1797 dollars per share. This shared price represents an estimated compounded annual growth rate and tesla stock of 18.53 per year. After discounting this by 15, i calculated a final intrinsic value for tesla stock of 883.14 cents per share, so there you have it. That is my final intrinsic value for tesla stock.

If you're bearish on the fundamentals of tesla's business, then the bear case intrinsic value of 313 dollars per share might make sense to you. I think tesla's fundamentals and leadership are strong enough to achieve the bull case scenario in the bull case. Tesla's estimated intrinsic value is one thousand four hundred dollars per share. While i believe that the bull case will occur, i'm open to all possibilities and that's why i factored multiple scenarios in my valuation model.

With that being said, if you're interested in the valuation species i use in this video, along with my main portfolio, my 25 000 portfolio, my watch list research reports, articles valuation models and much more check out my patreon in the first link down below by joining my Patreon, you will gain access to months of research on a variety of stocks and macroeconomic trends. If you enjoyed this video, please hit the like button and subscribe and i'll see you in the next one.