Q.

Use the EV/EBITDA multiple of General Motors to value the Tesla share. Use information in the table below to complete this question.

a) What is the per share value of Tesla based on the EV/EBITDA multiple of General Motors?'

b) Would you consider Tesla to be over-valued relative to General Motors and recommend that investors sell shares of Tesla based on your answers to part of this question? Briefly explain.

Company (period ending date) General Motors (GM) (30th Dec, 2019) $22.38 Tesla (TSLA) (30th Dec, 2019) | $746.36 Closing share price (20th April, 2020) 1,430 million 184.39 million $19,069 million $6,268 million Number of shares outstanding Cash and Cash Equivalents (as of period ending date) Short Term Investments (as of period ending date) Current Debt (as of period ending date) $4,174 million N/A $37,400 million $1,785 million Long Term Debt (as of period ending date) $65,924 million $11,634 million Revenue (12 months to period ending date) $24,578 million | EBITDA (12 months to period ending date) $137,237 million $12,771 million $23,996 million | CAPEX (12 months to period ending date) $4.62 $2,174 million $1,432 million - $4.87 0.73 7.5% EPS (12 months to period ending date) Beta (5 year monthly) WACC | Growth Estimates (per annum, for next 5 years) 1.51 7% 8.5% 389%