Tesla (TSLA) Should Raise Another $15 Billion - JMP Securities

JMP Securities analyst Joseph Osha believes Tesla (NASDAQ: TSLA) should raise a lot more money so it can get to the 2.5 million units and $100 billion revenue annual run-rate previously discussed. With the company’s $5 billion in open market equity sales now behind it, Osha suggests the company should raise another $15 billion.

Osha said the additional capital will allow the company to follow through on potentially expensive initiatives in vehicle autonomy and battery technology, while continuing to ramp output.

"We have said in the past and continue to believe that TSLA can be a $100 billion revenue company in 2025, with an EBITDA margin approaching 20%," Osha comments. "Applying a 4.5x EV/revenue and 22x EV/EBITDA valuation to those numbers, and discounting the resulting valuation back to the present at 10% per year, yields a result close to where the stock is currently valued. There is always room for debate about the appropriate discount rate, but a fundamental change in our stance would require an equally fundamental change in how quickly we believe the company can grow. At the moment, we are not sure that TSLA can grow more quickly than what we are modeling simply because of the operational challenges of scaling output by 5x between now and 2025."

The firm's analysis suggests that the company needs to spend a total of $29 billion on plant and equipment from 2021-2025 in order to get to ~2.3 million units in capacity, exiting 2025 at 2.5 million.

For an analyst ratings summary and ratings history on Tesla click here. For more ratings news on Tesla click here.

Shares of Tesla closed at $383.50 yesterday.

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