Tesla's current Weighted Avg Cost of Capital (WACC)

Tesla's current Weighted Avg Cost of Capital (WACC)

Submitted by adamjsapers on November 1, 2013

Can someone please help me determine Tesla's WACC. I am having trouble trying to find some of the necessary info to solve the formula. Thanks in advance for the help!!

adamjsapers |
November 1, 2013

Thanks for the help

gmenendez14 |
November 18, 2013

What Figures did you use to determine WACC?

Brian H |
November 18, 2013

Wikipediea:

The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets.
.
The WACC is the minimum return that a company must earn on an existing asset base to satisfy its creditors, owners, and other providers of capital, or they will invest elsewhere. Companies raise money from a number of sources: common equity, preferred stock, straight debt, convertible debt, exchangeable debt, warrants, options, pension liabilities, executive stock options, governmental subsidies, and so on. Different securities, which represent different sources of finance, are expected to generate different returns. The WACC is calculated taking into account the relative weights of each component of the capital structure. The more complex the company's capital structure, the more laborious it is to calculate the WACC.

Have fun.

usmanazher87 |
February 1, 2014

I need Tesla's WACC for 2011, 2012, and 2013. Would you please provide me with these numbers? Thank you.

Brian H |
February 2, 2014

usm;
This is a fan comment site, not an official TM one. Contact Tesla by email if you need info.

usmanazher87 |
February 4, 2014

My apologies. I asked because I saw the same question posted here by someone else. Thank you.

DTsea |
February 4, 2014

usually pure equity would be 13%, and a reasonable debt to equity of 40% would drop WACC to about 10%. you can go lower with more debt but default risk rises rapidly.

however as a startup there is more risk and shareholder may expect a bigger premium... so its hard to guess what Tesla might use as WACC in their ROIC calculations.

crhusband |
February 11, 2014

I was looking for the WACC and numbers used to determine WACC for 2011, 2012 and 2013, since I'm doing Tesla's valuation for a mock acquisition. Is the 10% mentioned in entry from Feb.4, the most accurate information available?

Some of my research has given me some of the following data:
enterprise value of $20.02 bill.
FCF yield of -2.49%
stock intrinsic value -$3, or 0 since it is negative

Other areas are not available, due to amount of historic data available.

Tesla's current growth is very exciting, and will continue to follow.

crhusband |
February 11, 2014

Looking for Tesla's WACC for 20012 and 2013,or figures to calculate. Thank you.

kmiske |
August 19, 2014

2013 WACC for TSLA is 5.15% based on a beta of 0.5 and cost of equity of 5.20% and market risk premium of 3.6%. Since WACC and cost of equity are almost identical this says that TSLA does not carry much debt.

Grinnin'.VA |
August 20, 2014

@kmiske | AUGUST 19, 2014

"2013 WACC for TSLA is 5.15% based on a beta of 0.5 and cost of equity of 5.20% and market risk premium of 3.6%."

Yahoo Finance lists TSLA with a beta of 1.41 as of today.
How does this affect the WACC?

adamjsapers| November 1, 2013Thanks for the help

gmenendez14| November 18, 2013What Figures did you use to determine WACC?

Brian H| November 18, 2013Wikipediea:

The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets.

.

The WACC is the minimum return that a company must earn on an existing asset base to satisfy its creditors, owners, and other providers of capital, or they will invest elsewhere. Companies raise money from a number of sources: common equity, preferred stock, straight debt, convertible debt, exchangeable debt, warrants, options, pension liabilities, executive stock options, governmental subsidies, and so on. Different securities, which represent different sources of finance, are expected to generate different returns. The WACC is calculated taking into account the relative weights of each component of the capital structure. The more complex the company's capital structure, the more laborious it is to calculate the WACC.

Have fun.

usmanazher87| February 1, 2014I need Tesla's WACC for 2011, 2012, and 2013. Would you please provide me with these numbers? Thank you.

Brian H| February 2, 2014usm;

This is a fan comment site, not an official TM one. Contact Tesla by email if you need info.

usmanazher87| February 4, 2014My apologies. I asked because I saw the same question posted here by someone else. Thank you.

DTsea| February 4, 2014usually pure equity would be 13%, and a reasonable debt to equity of 40% would drop WACC to about 10%. you can go lower with more debt but default risk rises rapidly.

however as a startup there is more risk and shareholder may expect a bigger premium... so its hard to guess what Tesla might use as WACC in their ROIC calculations.

crhusband| February 11, 2014I was looking for the WACC and numbers used to determine WACC for 2011, 2012 and 2013, since I'm doing Tesla's valuation for a mock acquisition. Is the 10% mentioned in entry from Feb.4, the most accurate information available?

Some of my research has given me some of the following data:

enterprise value of $20.02 bill.

FCF yield of -2.49%

stock intrinsic value -$3, or 0 since it is negative

Other areas are not available, due to amount of historic data available.

Tesla's current growth is very exciting, and will continue to follow.

crhusband| February 11, 2014Looking for Tesla's WACC for 20012 and 2013,or figures to calculate. Thank you.

kmiske| August 19, 20142013 WACC for TSLA is 5.15% based on a beta of 0.5 and cost of equity of 5.20% and market risk premium of 3.6%. Since WACC and cost of equity are almost identical this says that TSLA does not carry much debt.

Grinnin'.VA| August 20, 2014@kmiske | AUGUST 19, 2014

"2013 WACC for TSLA is 5.15% based on a beta of 0.5 and cost of equity of 5.20% and market risk premium of 3.6%."

Yahoo Finance lists TSLA with a beta of 1.41 as of today.

How does this affect the WACC?

Ron :)