We See Higher Inherent Risk in the Tesla Story Right Now
With Tesla's recent need to raise more debt, albeit convertible debt, and CEO Elon Musk's May 16 companywide email calling for "hardcore" measures to curb costs, we think the balance sheet and operational risk of investing in Tesla's stock has increased enough to merit raising our weighted average cost of capital. Moving our cost of equity to the highest risk band in our methodology and raising our credit risk rating results in a WACC increase to about 12% from about 10%. This change causes a 29...Tesla designs, develops, manufactures, sells and leases electric vehicles and energy generation and storage systems, and provides services related to its products. The company operates as two reportable segments: automotive, which includes the design, development, manufacturing, sales, and leasing of electric vehicles as well as sales of automotive regulatory credits; and energy generation and storage, which includes the design, manufacture, installation, sales, and leasing of solar energy generation and energy storage products, services related to such products, and sales of solar energy system incentives.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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