The hottest Valuation Techniques Substack posts right now

Having too much data can be overwhelming and lead to distractions. It's important to focus on the most relevant information when making decisions.
Data should not be seen as the only answer; personal judgment and reasoning are essential in analysis. Relying solely on data can hinder good decision-making.
Data can be biased and subjective, even though many think of it as purely objective. It's crucial to be mindful of how data is presented and used.

Price and value are different concepts. Price is what you pay in the market, while value is what a stock is really worth based on its cash flow and risk.
During market chaos, prices can swing wildly based on mood and speculation. This means prices might not reflect true value for a long time.
Investors need to figure out their approach based on their belief in value, their cash situation, and where they think they have an advantage in the market.

Tesla has seen a huge increase in revenue, almost doubling thanks to the success of the Tesla Model 3. This shows that there is strong demand for electric cars.
Despite this growth, Tesla is heavily in debt, which puts its future at risk. The company borrowed a lot to fund its growth, making it vulnerable if things don't go well.
Elon Musk's unpredictable behavior, especially on social media, adds uncertainty to Tesla's stability. Investors often worry about his actions affecting the company's image and financial health.

Data access has changed a lot over the years. In the past, it was hard to find data unless you were at a university or bank, but now it's way easier and more global.
The reason for sharing this data is partly self-interest. It helps the creator make better investment decisions and save time throughout the year.
When using this data, remember that it reflects personal judgments and can include errors. It's important to verify details and be cautious when making decisions based on the numbers.

Twitter's IPO is a chance to value the company based on its user growth and revenue potential, even without full financial data yet. It's crucial to understand its value before buying shares.
The company's revenue has been growing rapidly, but it still shows operational losses. Valuing Twitter is tricky because it's in its early growth phase and has a long way to go to achieve profitability.
Investors should be cautious about Twitter's valuation compared to its peers and be aware of market competition. A solid assessment of the company's future cash flows and expenses is essential before any investment.

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When valuing growth companies, you need to think about how big their revenues can actually get based on the market size. Companies in larger markets can expect to earn more than those in smaller markets.
Some companies can surprise everyone and grow more than expected by changing what they sell, expanding to new places, or coming up with new innovations. This can make their potential market much bigger.
Investors often get the big picture right but mess up when looking at individual companies. They might think many businesses can grow quickly, but if they all try to take a big share of the market, profits can get squeezed.

Lower risk free rates mean lower discount rates, which can make assets look more valuable. However, this can be complicated for valuers who want to keep a low value for an asset.
The risk free rate reflects general economic expectations, combining views on inflation and growth. When it's low, it often signals a lack of confidence in the economy's future.
How you value assets today can vary widely. You can stick with current rates for a more dynamic approach or try to normalize past rates for a different perspective, but be careful not to mix inconsistent inputs.

Emerging markets are seeing more companies being publicly traded, which makes their financial markets grow and become stronger. This is especially true in big economies like India, China, and Brazil.
Liquidity issues are now affecting both emerging and developed markets, showing that crises can happen anywhere. Emerging markets are becoming more liquid as local investor bases expand.
The risk of government default is being reconsidered, as some developed market governments show vulnerabilities. People are starting to value companies in emerging markets more based on their fundamentals rather than government risks.

Debt involves fixed payments that must be made regardless of a company's financial situation. If a company doesn't make these payments, it risks losing control over its assets.
Interest payments on traditional loans and bonds are usually clearly defined, making them straightforward to classify as debt. However, items like accounts payable are trickier because their costs are often included in broader categories without clear interest rates.
Lease commitments are considered debt because they involve contractual obligations and can have legal consequences if unpaid. For many companies, lease payments represent a significant portion of their overall debt.