The way the analysts value companies like Tesla is like this:
1-We have over 7 billion people on earth
2- In 20 years it might go up to 9 billion !! so for simplicity we assume 10 billion
3- All countries like China, India are growing and everyone will need a car and will need an energy efficient car like Tesla
4- So there will be 10 billion Tesla cars sold in 20 years !!
5- Each Tesla is sold at 85K on average but new models can be sold at 100K on average.
6-Margin is 50% on each car so 50K profit on each car.
7- 10 billion x $50,000 equals $500 Trillion
8- So based on the above calculation Tesla shares should be $20,000
Do you see any flaw in the above calculation?
