You need to look at it in context. Download the Dilution Spreadsheet given in the post and switch to the second tab.

According to the Professorâs estimates, Tesla is fairly Valued at $200. And based on this initial issuance price, he is assuming that Tesla will issue newer shares at slightly higher prices every year for 8 years ($218 - $398.51). In doing so, the fair value of $200 rises to $201.92 (Because of dilution). But what the Professor is trying to state here is that, Teslaâs Value via the DCF approach ($200) and the Value via the Dilution approach ($201.92) is almost equal, regardless of the Dilution effect (You can consider it a break-even of sorts, where the dilution offsets the increased issuance prices).

However, if you assume that Telsa issues Shares at $250, the Value via the Dilution approach *drops* to $214.35. On the other hand, if Telsa issues shares at $175, the Value via the Dilution approach *increases* to $193.89. You have to understand that both $250/$214.35 and $175/$193.89 are the Value of Telsa **now**/**in the same period**. But at these higher/lower initial issuance prices i.e. alternative intrinsic values, the break-even is lost. You can input $250 and $175 in place of the $200 in the spreadsheet and see for yourself.

The Prof. is simply trying to prove a point, which he mentions just a little ahead of this seemingly confusing exercise: â*If you are doing a discounted cash flow valuation, ***the right response to the expected dilution is to do nothing**. That may sound too good to be true, but it is true, and here is why. The aggregate value of equity that you compute today includes the present value of expected cash flows, including the negative cash flows in the up front years. The latter will reduce the present value (value of operating assets), and that reduction captures the dilution effect. You can divide the value of equity by the number of share outstanding today, and you will have already incorporated dilution.â

I hope this helped.