My original share price prediction:
I posted my revised 5 Year Forecast in January and calculated a Share Price of $1,930 by year end.
It was computed as follows:
GAAP EPS $12.87
X 150 multiple
= $1,930
This was based on deliveries of 1,555k.
5 Year Forecast - Published in January
Current Thoughts:
I have not updated my 5 year model; but here is my current back of the envelope thinking:
Prior to the Shanghai shutdown, my GAAP EPS had risen to $13.30 from my original $12.87 (based on strong Q4 financial metrics).
If Shanghai returns to production by May 1, I only expect a Full Year EPS reduction by about $1.00 taking my GAAP EPS from $13.30 to $12.30.
GAAP EPS $12.30 X 150 multiple =
$1,845 per share.
Why only a $1.00 EPS impact from a 1 month Shanghai Shutdown?
If Shanghai comes on line May 1, I still expect deliveries of 1,555k for the year. The lost April production in Shanghai of 70k units can be recouped over the 8 months of May-Dec across all 4 sites. It would require a 6% increase in the balance of year production versus my original production numbers.
The 6% increase is achievable . . .remember, Tesla is chip constrained in 2022 and not production constrained. If they have chips for 1,555k cars they will build 1,555k cars assuming Shanghai is back online by May 1. The reason for the $1.00 decline in EPS despite deliveries staying at 1,555k is because of inefficiencies incurred with a one month shutdown (particularly with labor costs).
A price of $1,845/shr by year end may seem aggressive considering we are at about $1,000/shr in April especially in-light of covid, Ukraine, Inflation, Fed Res rates increases . . . but Tesla will keep marching forward putting up huge profits and cash flow numbers . . . . there is the likely share split arriving too.
Tesla often turns on a dime . . .if Q1 financials are strong and Shanghai reopens by May 1 . . .we can move to new highs quickly.
Investing in Tesla will be a flight to safety.
