Tesla, Inc. (NASDAQ:TSLA) had what many would consider a very strong quarter in quite a while, as TSLA in Q4 2022 beat on revenue and earnings without as much ludicrous commentary as usual from Elon Musk on the earnings call. Investors responded favorably, adding +25% to the stock price over the past five trading sessions. We value the business at $195/share and expect upside on new announcements and ongoing execution absent any material shortages for supplies in the supply chain. TSLA's solid performance in the afterhours session continued into Thursday’s trading session for an additional +10% gain, bringing the BEV (battery electric vehicle) maker's market cap to $500 billion.

We value TSLA stock using a mix of adjusted EBITDA and P/E multiples on FY '25 revenue of $222 billion, and anticipate an additional 20% upside, maybe more depending on hype/optimism tied to product roadmap and deliveries. Tesla reported Q4 ‘22 revenue of $24.32 billion versus consensus $24.16 billion, and adjusted dil. EPS of $1.19 versus $1.13, beating estimates by 5.3%.

We noted a drop in profitability, which was driven by lower ASPs, but the announcement of some higher margin categories like the Tesla Cybertruck and Tesla Semi Truck makes us extremely optimistic that the net profit margin erosion won’t be as severe, even with volume car production on Model 3/Y putting pressure on average selling prices.