Tesla Motors (A): Financing Growth

Abstract

The case analyzes the equity market value of Tesla Motors, the electric car company founded and led by Elon Musk. Wall Street analysts are wildly divided on the future growth prospects for this company, and analysts’ one year share price targets range from $160 to $500. The case explores in detail the valuation case made by two analysts covering Tesla, one a bull on the stock and one who is bearish. Students are asked to evaluate the arguments and the analytical approaches employed by each analyst; to discuss the implications of these differing stock valuations for the company's financing policy, in particular whether it makes sense to issue new common stock; and to discuss whether Tesla represents a good investment.