Share Count Confusion: Dilution, Employee Options and Multiple Share Classes!
aswathdamodaran.substack.com
In my last post, just about four weeks ago, I valued Tesla, and as with all of my Tesla valuations, I got feedback, much of it heated. My valuation of Tesla was $186, in what I termed my base case, and there were many who disputed that value, from both directions. There were some who felt that I was being too pessimistic in my assessments of Tesla's growth potential, but there were many more who argued that I was being too optimistic. In either case, I have no desire to convert you to my point of view, since the essence of valuation is disagreement. In the context of some of these critiques, there was discussion of how my valuation incorporated (or did not incorporate) the expected dilution from future share issuances and what share count to use in computing value per share. Since these are broader issues that recur across companies, I decided to dedicate a post entirely to these questions.
Share Count Confusion: Dilution, Employee Options and Multiple Share Classes!
Share Count Confusion: Dilution, Employee…
Share Count Confusion: Dilution, Employee Options and Multiple Share Classes!
In my last post, just about four weeks ago, I valued Tesla, and as with all of my Tesla valuations, I got feedback, much of it heated. My valuation of Tesla was $186, in what I termed my base case, and there were many who disputed that value, from both directions. There were some who felt that I was being too pessimistic in my assessments of Tesla's growth potential, but there were many more who argued that I was being too optimistic. In either case, I have no desire to convert you to my point of view, since the essence of valuation is disagreement. In the context of some of these critiques, there was discussion of how my valuation incorporated (or did not incorporate) the expected dilution from future share issuances and what share count to use in computing value per share. Since these are broader issues that recur across companies, I decided to dedicate a post entirely to these questions.