Quick useful tip on an easy way to find a companies intrinsic value (from managements POV)

I especially do this with every company that has had an IPO within past 3-5 years as you can usually find something hidden on it.

Here's an example from TOST 10K report. Page 121 says this:

In consideration for the acquisition of xtraCHEF, we issued 569,400 shares of common stock to the seller shareholders with a fair value of $26.10 per share on the acquisition date supported by a contemporaneous valuation.

They acquired xtraCHEF on June 8th 2021.

TOST IPO price was $55 on Sep. 24th 2021.

That's an increase in share price of around 115%~ in just 3 months. How can a companies intrinsic value increase by more than double in 3 months? Well… it simple cannot. This means either management (or the third party appraiser, not sure who valued it exactly) valued their stock too low on the aquistion of xtraChef OR it means the IPO price of $55 is grossly overvalued… Now I'll let you decide which one is the obvious answer here 🙂

TOST has a fair value (according to their own management or a third party appraisal) of around $26.10 today.

TOST value today is $19. Insiders have been recently buying. A combination of these signs mean that the stock (even without my own DCF) is probably undervalued at today's price.

Always always try and look for what management thinks their own fair value of stock in the annual reports.

Usually you can find some type of acquisition like this or similar. I found the same thing in RobinHood where management believe the fair value of $HOOD is around $16.

Simple things like this can guide you towards the true value and stop you from overpaying.

Thanks