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“Growth is NOT for Free”: The Importance of Valuation

Prof. Eichner, new Professor at Pforzheim University, who specializes in Corporate Finance, was previously a Senior Manager at KPMG and is also a lecturer at the Institute of Accounting, Controlling & Auditing at the University of St Gallen, Switzerland.
During his lecture titled “The Hottest Stock on the Street: Is Tesla (still) Overvalued?”, Prof. Eichner focused on Corporate Finance principals to determine if Tesla is over-valued. He focused on his execution-based, hands-on teaching approach by engaging students throughout his presentation.
Prof. Eichner constantly posed questions and really challenged everyone to think about the many ways investors value firms by focusing on the principles of valuation, the valuation subject (Tesla), and valuing Tesla itself. He talked about how the Discounted Cash Flow Model is the best approximation for valuation of a firm.
After presenting several formulas and talking more in-depth about the subject, Prof. Eichner showed the MBA students an Excel model that helped show how many different areas can affect the value of Tesla. Based on many firm-specific factors such as growth, profitability, and leverage, Tesla’s stock might be currently overvalued. As Prof. Eichner said: “Growth is not for free.” He also showed which value drivers would need to change to justify the firm’s current market price.
Prof. Eichner ended on a Q&A session with the new MBA students where they were able to ask him more about upcoming courses he teaches such as Mergers, Acquisitions and Corporate Restructurings, as well as Applied Corporate Valuation. It was a very engaging session that piqued the interest of many students interested in Strategy, Corporate Finance and Accounting.

Text: Rupert Rivera III, MBA Class of 2020/MBA Office
Photo: MBA