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%.