The stock had a massive relief rally which might continue for a couple of days.
I am interested in the opinion of value traders here. The company is unprofitable.
Simply Wall St did a valuation analysis on the stock and found it to be 35% undervalued! Well, what did they do wrong? They used cash flow without subtracting stock based compensation which is huge!
In the last 12 months, net income =-500 million
Stock based compensation… = 500 million. Stock based compensation imply future diultion of shareholders.
It is hard to value an unprofitable company but here is what I did:
I took their operating income (assumed they are making 100 million instead of losing money 500) and grew it at 30% for 5 years, and 20% for the following 5 years, and gave it a P/E of 20 in 2032.
I only discounted at 3% interest rate … and I get: $25 Billion …
Extremely generous assumptions since grow rate has been declining at a pace that suggests it will be growing at 20% instead of 30% in 2-3 years.
The company is currently value at $71 billions
Interested in your thoughts.
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