Balance Sheet & Funding Commitments, page-69

Been mulling this over for a little while .... since I am diversified in many holdings in the "electrification space" (forgive me pabs).

Here is a "mass of numbers" - but what does it all mean ans what am I getting at



The 1st 4 companies are all "pure play" EV manufacturers in various stage of the their business. TSLA of course everyone knows and is somewhat of a "benchmark". OK then lets benchmark to TSLA. The metric I'm going to benchmark is REVENUE ... that's just a "topline number" and often useless on its own. However the Enterprise Value (EV) to Revenue metric is very popular for growth investors AND and been extensively used by SPACs (Special Purpose Acquisition Company) in bringing a private company public ... more on that in a moment.

TSLA trailing twelve months (TTM) EV/Revenue multiple is ~21.8X ... a shockingly high number in market terms but when you look across the 2nd blue row it seems "low" (look at WKHS at 1,421X and TLG at 72X ... but of course all that really says is our revenue stream hasn't yet started). QS on that basis is infinity ... or Not Meaningful as it has no revenue.

XL Fleet (ticker XL) was merged into existence a couple of days ago by it's SPAC. The SPAC starts it life by selling shares at $10 in a blank check company that is going to make a future acquisition. Pivotal (the SPAC) merged with a private company called XL Fleet Solutions to create a company XL Fleet Corp in a transaction which at the $10/share price of the SPAC put the enterprise value of the new company at ~$1.087B. Just a couple of days later the market has bid up the price of XL to just under $30/share ... and as you can see from the spreadsheet the EV is just under $4B.

Now I plan on buying any XL ... just for the record ... it is there for multiple comparison purposes.

So, the market king TSLA currently sports a 21.8X EV/Rev multiple.

All things being equal that would mean based off of revenue growth assumptions in 2023

TSLA EV = ~$2.074T ... as in over 2 Trillion Dollars in market cap. Do you believe???

The SPAC sellers say don't compare TTM or FTM revenue ... look to when the business has spent capital to construct its business and has begun selling ... for XL this is FY23. For QS it happens to be FY'27 (gee that's a long way off).

Which means look to the first red row ... and the present day $30/sh and you see a multiple of ~6.1 and as you go further to the right to TSLA in FY'23 it happens to be ~6.4 ... Close enough to the same number .... and the implication is you are buying a company "cheaply" because the future revenue of XL is a multiple that is at a 1/4 of TSLA's present day multiple.

That to me suggest's that TSLA share price comes down... maybe the to half of what the multiple is ... still makes TSLA a $1T company end 2023. Also suggests then for XL that it is reasonable to value at $60 and a 12.8X multiple.

The point is these are real multiples being paid by stock investors (speculators?) now.

Lightning Motors is a SPAC I am exploring for further diversification

The RHS is what we are more interested
1. A battery maker QS ... which is yet to make a commercial battery (but holds great promise) AND CURRENTLY HAS A MARKET CAP LARGER THAN CATL ... the largest battery maker I believe and ~US$7B in Revenue ... call it 6.5X multiple

2. I put TLG and NVX side by side ... because I own both but heavily weighted in favor of TLG. For my money there is little difference at present in the two on this metric comparison. In other aspects there is light years.

3. Keeps returning to what the "right-sized" multiple is for TLG (or NVX). Should a car manufacturer have a multiple as high as 12X. Is CATL at 6.5X to low for a battery maker. QS is ridiculous now. Would 9 be close enough to midpoint between battery maker and OEM that a battery could be valued at?

At 9X then at 2023, TLG EV = $1.9B and on a rocket trajectory as it scales up to 100K and over in the next years.

Hope you all had a Merry Christmas ... and may 2021 be our year!