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Tesla's rise is summarized in the graph below, where we look at the company's revenues and earnings over time, with earnings measured in gross and operating terms, and EBITDA capturing operating cash flows: 2022 numbers updated to reflect 4th quarter earnings call on 1/25/23 Between 2010 and 2020, Tesla grew revenues from $117 million to $31.5
billion in gross profit in the last twelve months leading into 2023, but operating income drops off to $6.4 Finally, I look at the aggregated values across all companies on all three income measures, across all global companies, again broken down by sector: Collectively, global companies reported $16.9 billion and need income is only $4.3
In my last three posts, I looked at the macro (equity risk premiums, default spreads, riskfreerates) and micro (company risk measures) that feed into the expected returns we demand on investments, and argued that these expected returns become hurdle rates for businesses, in the form of costs of equity and capital.
EBIT & EBITDA multiple s 5. Working capital needs Thus, I compute pricing multiples based on revenues (EV to Sales, Price to Sales), earnings (PE, PEG), book value (PBV, EV to Invested Capital) or cash flow proxies (EV to EBITDA). Long term Reinvestment (Cap Ex & Acquisitons) 4.
In my last data updates for this year, I looked first at how equity markets rebounded in 2023 , driven by a stronger-than-expected economy and inflation coming down, and then at how interest rates mirrored this rebound. Globally, health care has the highest percentage of money-losing companies and utilities have the lowest.
4] , [3] , [5] Unlike mature, publicly listed companies which are easier to compare using multiples of current earnings (like EBITDA) [3] , startups must be valued based on their projected future; moats, margins and the perceived strength of their future growth trajectory. [3] 23] Risk-FreeRate: Tied to government bond yields (e.g.,
2] Startups typically lack significant historical financial data, often operate with negative profits initially, rely heavily on private equity or venture capital rather than traditional bank loans, and face a much higher risk of failure. [1] This premium rises when perceived market risk increases. [27] 2] [17].
I aggregated the market capitalizations of all stocks at the end of 2023 and the end of 2024, and computed the percentage change. I am no expert on exchange rates, but learning to deal with different currencies in valuation is a prerequisite to valuing companies.
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