Session 14: Valuing the Market and Young Companies

We started class today with a, model to value an index (the S&P 500). If you are interested in an updated version, where you can change the numbers try this link:
We then looked at valuing young companies, with the focus on Amazon. If you are interested in how best to adapt valuation models to value companies on the dark side. Specifically, we examined how best to value young companies with limited information. If you are interested, try this paper on valuing young companies:
I also have a blog post that you may find relevant for today’s discussion on how dilution in future years is already incorporated into value:

[chandrannatarajan]

Thank you professor for another interesting session. Stay Blessed always🙏

[bulganbatsaikhan]

Yo, Boss. You said that long term risk free rates are a good proxy for long term nominal growth rates of the economy. By the same logic, how should we arrive at long term nominal growth rates for an emerging economy with no long term bonds? Should we just convert the long term risk free rates of the US using inflation differentials? Should CRPs be applied at all?

[samuelschlesinger]

The name of one of your students is in the thumbnail, you might want to fix that. Great lecture, thanks.

[pseudomeccepa]

Is there explaination why reinvestment tied to sales, besides other ratio doesn't work?

[nebojsascepanovic]

Professor, if in calculating terminal value we divide CF after reinvestment with r-g, isn't it very similar with applying the multiple ?! For example, dividing with 0.09-0.03 is multipliing by 17, or 0.08-0.03 is multiplying by 20 etc. I know it sounds trivial, but TV formula is as simple as earnings multiple