Since early December, Tesla's stock has skyrocketed more than 30%, fueled by investor optimism regarding its future prospectsThis surge was momentarily stifled when the Federal Reserve projected hawkish outlooks, yet the stock has climbed 86% year-to-dateThe question at hand is how much of this exuberance is already factored into the current stock price, particularly after such a remarkable rebound

The company is primarily based on its electric vehicle (EV) and energy production and storage operations, valued at $185 per share for its EV businessHowever, Tesla's electric vehicle division has faced numerous challenges, including weak demand, reduced government incentives, and intensified competitionDespite a strong performance in Q3 2024, where sales grew by 5% year-on-year, the EV revenue dipped by 3% for the first nine months of 2024.

To gauge the value of Tesla's electric vehicle segment, I assumed a 10% annual revenue growth rate and a 15% net profit margin in a base case scenario by 2030. This optimistically considers that continued government support for EVs could stimulate market share growth, thus improving mid-term performance

While cutting the $7,500 federal tax credit could hurt EV manufacturers, Tesla may be less severely affected compared to newcomers who strive for breakeven in their EV businessesAdditionally, the anticipated launch of Tesla's compact EV model, the Model Q, could further restore revenue growth.

I applied a target price-to-earnings (P/E) ratio of 15, suggesting that Tesla's EV sector deserves a premium over the industry averageComparison is made with BYD (21x P/E) and Li Auto (17x), where companies with a high share of electric vehicle business generally boast higher P/E ratios than traditional automakers like Toyota (7.9x) and Ford (11x). Based on these assumptions, my base scenario reveals that by 2030, the Tesla EV business could be valued at $354 billion or $110 per share.

In my optimistic scenario, assuming a higher annual revenue growth rate of 15% while holding other assumptions steady, the valuation could leap to $462 billion, translating to $144 per share.

As for Tesla's energy production and storage segment, strong demand for Megapack and Powerwall products, emphasized by Elon Musk in the Q3 2024 earnings call, is driving remarkable growth in this sector

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Revenue soared by 52% year-on-year in Q3 2024, following a staggering 100% increase in Q2 of the same yearThe profit margin also improved dramatically, escalating from 25% in Q2 to a record high of 31% in Q3. With the upcoming launch of the Powerwall 3, increased production capacity at the Lathrop Megafactory, and Megapack shipping set to commence from the Shanghai Megafactory in Q1 2025, the growth is expected to persist.

Although the storage business currently accounts for less than 10% of Tesla's existing operations, its growth momentum is astoundingTo assess this segment, I estimate a 30% annual revenue growth and a net profit margin of 20% based on comparisons with publicly traded solar and storage firmsIf Tesla can sustain this growth trajectory, a 30 times target P/E ratio appears reasonable

Based on this scenario, I project that by 2030, the storage division could be valued at $245 billion or $76 per share.

In a more bullish scenario, with elevated growth and profit assumptions, this sector might reach a valuation of $307 billion, equating to $96 per share by 2030. The total valuation of Tesla’s existing operations, encompassing both automotive and energy storage, stands at $599 billion or $187 per share, adding the cash reserves and subtracting debt and minority interests results in an estimated fair value of $619 billion, which implies $193 per shareThis valuation, based solely on vehicles and energy storage, remains significantly lower than the current market price of $462, as per the last closing price from December 24.

Moreover, applying a Discounted Cash Flow (DCF) model with a 15% growth rate for free cash flow, a terminal growth rate of 3%, and a weighted average cost of capital at 10%, similarly affirms a target price around $185 per share for 2030. Both SOTP and DCF indicate that the current stock price reflects an optimistic outlook concerning new ventures such as Robotaxi, Full Self-Driving (FSD), and humanoid robots.

Investors are highly expectant regarding the introduction of their autonomous taxi service, slated for launch in October 2024, signaling a specified goal to produce 2-4 million units annually starting in 2027. Notably ambitious, seeing competitors like Waymo operating only 700 autonomous vehicles since their 2018 roll-out

Musk envisions a deployment of a small fleet in Texas by 2025, possibly extending to California, pending regulatory approval.

When evaluating Tesla’s Robotaxi business, I maintain conservative projections, as Mizuho analysts foresee a production volume by 2030 at just 207,000 unitsFor my estimates, I assume a conservative average output of 100,000 units per year, suggesting 600,000 autonomous taxis could be operating by 2030. Assuming a fare of $2.50 per mile and annual driving of 70,000 miles, the projected revenue could reach $105 billion by 2030. Comparatively, Uber’s net profit margin rests at 10%, and given Tesla’s robotic taxis will be driverless, a margin of 15% seems plausibleWith a 30 times P/E ratio (referencing Uber’s valuation), this positions the autonomous taxi business at approximately $473 billion or $147 per share.

In my optimistic scenario for Robotaxis, if annual production averages 150,000 units, this translates into 900,000 autonomous taxis on the roads by 2030, holding other assumptions constant would elevate this valuation to $709 billion or $221 per share.

FSD represents another essential aspect of Musk's vision, aimed at crafting an entirely self-driving transport ecosystem

As of Q3 2022, approximately 15% of Tesla vehicles sold are equipped with FSDAlthough no updated figures from 2023 and 2024 are available yet, these statistics provide valuable insight into the probable FSD adoption rate.

FSD features are currently available for $99 a month in the US and Canada, with a price reduction introduced in April 2024 from $199 to enhance accessibilityProjecting FSD adoption to rise to 20% by 2030 appears reasonable, with overall Tesla vehicles growing from 6.7 million in Q3 2024 to 19 millionThis positions anticipated revenue at $4.6 billion, assuming a 30% net profit margin and a 50 times target P/E ratio, suggesting FSD could reach a valuation of about $68 billion or $21 per shareIn an optimistic scenario, if FSD adoption rises to 30%, my estimate indicates a valuation of $102 billion or $32 per share.

Optimus is poised to be a transformative product, designed to undertake mundane tasks and operate within hazardous environments as part of Tesla’s vision together with SpaceX

Unlike typical robots, there are elevated expectations that Optimus will be equipped with Tesla’s advanced AI capabilities and sophisticated neural networks.

Yet, the evolutionary journey of Optimus into a significant business driver may still require time, with projections pushing beyond 2030. The extent of its intelligence remains uncertain, highlighted by demonstrations where some functionalities were reportedly remotely operated by humansAccording to Musk, Optimus is meant to be an affordable consumer product, expected to launch at under $20,000 with small-scale production to commence in 2025, ramping up to millions of units within five to six years.

However, the timeline and scalability of Optimus's rollout face considerable challenges and technological hurdles that may require several years to address

While the $20,000 price point may be suitable for enterprises, it likely remains prohibitively expensive for common households, leaving the scale of the rollout and demand significantly uncertain.

Assuming a price of $20,000 and predicting sales of 182,000 units by 2030 (according to ABI Research forecasts), I estimate that revenue from humanoid robots could reach $3.6 billion in my base caseWith a comparable net profit margin of 15% and a 50 times target multiple, this could yield a market value of $27 billion or $9 per share for the humanoid robot divisionIn a more optimistic projection, doubling the sales figures could estimate the humanoid robot market value at $55 billion, or $17 per share by 2030.

Ultimately, my SOTP valuation suggests a fair value of $370 per share for Tesla, indicating a sell rating below the last closing price of $462. Aggressive assumptions must be made to justify a buy rating, particularly regarding the production of Robotaxis, which constitutes approximately 40% of my target price.

However, my sell recommendation is not without risk

Should the government unexpectedly loosen restrictions on FSD and Robotaxis, this could lead to an upswing in sentiment toward Tesla’s stock, placing it at a potential advantage.

Furthermore, the much-speculated Model Q’s timely release could also elevate share prices due to anticipated higher-than-expected EV sales growth.

In conclusion, proving the rationale behind Tesla's stock surge and valuation hike necessitates a substantial degree of optimism or imaginationNoteworthily, unproduced Robotaxis account for nearly 35-40% of my target price in both base and optimistic scenariosGiven that Waymo has only rolled out 700 autonomous vehicles over six years, my basic projection of 100,000 Cybercabs by 2030 appears overly optimistic