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TSLA – Market expectations are for record-high Uniform ROA, but management may have concerns about their supply chain, cash flows, and production

May 27, 2021

  • Tesla, Inc. (TSLA:USA) currently trades above historical averages relative to UAFRS-based (Uniform) earnings, with a 122.4x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about supply chain headwinds, their cash flow position, and production in China

  • Specifically, management may have concerns about the sustainability of demand for electric vehicles, renewable electricity needs, and the impact of lost revenue and profits from their transition to the Palladium program. In addition, they may lack confidence in their ability to mitigate supply chain challenges, scale production in China, and develop an entire road system for their self-driving car. Furthermore, management may lack confidence in their ability to increase Powerwall volumes and sustain cash flow improvements