QUESTION 4 [12 marks] Use the EV/EBITDA multiple of General Motors to value the Tesla share. Use information in the table below to complete this question. Company (period ending date) General Motors (GM) (30th Dec, 2019) $22.38 Tesla (TSLA) (30th Dec, 2019 $746.36 1,430 million 184.39 million $19,069 million $6,268 million $4,174 million NA Closing share price (20th April, 2020) 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) Long Term Debt (as of period ending date) Revenue (12 months to period ending date) EBITDA (12 months to period ending date) CAPEX (12 months to period ending date) EPS (12 months to period ending date) $37,400 million $65,924 million $1,785 million $11,634 million $137,237 million $24,578 million $2.174 million $12.771 million $1,432 million $23,996 million $4.62 1.51 - $4.87 Beta (5 year monthly) 0.73 7.5% WACC 7% Growth Estimates (per annum, for next 5 years) 8.5% 389% a) What is the per share value of Tesla based on the EV/EBITDA multiple of General Motors? (8 marks) QUESTION 4 continued: 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 a) of this question? Briefly explain. (4 marks) QUESTION 4 [12 marks] Use the EV/EBITDA multiple of General Motors to value the Tesla share. Use information in the table below to complete this question. Company (period ending date) General Motors (GM) (30th Dec, 2019) $22.38 Tesla (TSLA) (30th Dec, 2019 $746.36 1,430 million 184.39 million $19,069 million $6,268 million $4,174 million NA Closing share price (20th April, 2020) 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) Long Term Debt (as of period ending date) Revenue (12 months to period ending date) EBITDA (12 months to period ending date) CAPEX (12 months to period ending date) EPS (12 months to period ending date) $37,400 million $65,924 million $1,785 million $11,634 million $137,237 million $24,578 million $2.174 million $12.771 million $1,432 million $23,996 million $4.62 1.51 - $4.87 Beta (5 year monthly) 0.73 7.5% WACC 7% Growth Estimates (per annum, for next 5 years) 8.5% 389% a) What is the per share value of Tesla based on the EV/EBITDA multiple of General Motors? (8 marks) QUESTION 4 continued: 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 a) of this question? Briefly explain. (4 marks)
