Thanks for the detailed reply. Really appreciate it.
Whatever be the Prof’s estimate of intrinsic value via DCF, the intrinsic value via the Dilution Method would still be similar. It doesn’t matter what the estimate is, 200, 275, 150, or any other value. I get that.
I want to make my limited point though:
Given any intrinsic value arrived at by the Prof (or anyone else), if the company is able to issue shares at a much higher level (in this case, the market price for the shares is higher than the Prof’s estimate), the Prof’s estimate of intrinsic value will have to be revised upwards (in my opinion). That is, he will have under-estimated the value per share originally.
The same logic applies in case the company has to issue shares at a lower price than the Prof’s estimate. In this case, the Prof’s estimate will have to be revised downwards. That is, (in hindsight) he will have over-estimated the value per share originally.
Hence, I think his statement in the article is wrong.
“If Tesla is able to issue shares at a higher price (than its intrinsic value), we will have over estimated the value per share, and if it has to issue shares at a price lower than its intrinsic value, we will have under estimated value.”
As I said, I understand what he is trying to say (I have been reading his work since years), but the above sentence doesn’t make sense to me. That is my limited point.