DCF model with negative FCF starting number?


I decided to do a valuation on Amazon now that the split has happened(meant to before but never got around to it and would be in the same scenario anyways.)

Out of the few companies I’ve done an evaluation on this is the first time I’ve come across this problem.

Amazon had negative FCF in 2021. This is an outlier as well. It’s not a trend and is wrecking havoc on my excel sheet.

This is causing the DCF to increase the negative number 10 yrs out. If I change it to positive, it seems too low. On the other hand I’m worried if I ignore last year and value it out from 2020 that I’m missing out on an important lesson for future valuation.

I haven’t been able to find anything solid online on how to go about this.

My question is for anyone that knows how to deal with this.
– How do you do a DCF when the starting FCF number is a negative, and that number isn’t a trend.

Thanks for any help.

P.S. also for anyone who has done this before does Amazon’s 10-Ks seem far more opaque than other companies or is it just me?


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