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Tesla Inc TSLA

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Morningstar’s Analysis

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Economic Moat


Capital Allocation


Tesla Remains Profitable and Generates Good Cash Flow for Third Quarter

Analyst Note

| David Whiston, CFA, CPA, CFE |

Tesla reported a good third quarter with adjusted diluted EPS of $0.76 beating the Refinitiv consensus of $0.57 and up from $0.37 in third quarter 2019. After taking Tesla out from under review as explained in our Oct. 19 note to upgrade its moat to narrow from none, our new fair value estimate is $319. About 41% of the increase from our prior $195 valuation is from the moat upgrade, while nearly all the rest is from increasing our total vehicles delivered through 2029 by about 37% to 22.7 million. This change leads to more scale and an increase in our midcycle operating margin to 12% from 11%.

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Company Profile

Business Description

Founded in 2003 and based in Palo Alto, California, Tesla is a vertically integrated sustainable energy company that also aims to transition the world to electric mobility by making electric vehicles. It sells solar panels and solar roofs for energy generation plus batteries for stationary storage for residential and commercial properties including utilities. It also makes solar roofs and plans to enter the HVAC market. The Tesla Roadster debuted in 2008, Model S in 2012, Model X in 2015, Model 3 in 2017, and Model Y in 2020. Global deliveries in 2019 were 367,656 units. Tesla went public in 2010 and employs about 50,000 people.

3500 Deer Creek Road
Palo Alto, CA, 94304
T +1 650 681-5000
Sector Consumer Cyclical
Industry Auto Manufacturers
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 48,016