tag:blogger.com,1999:blog-8152901575140311047.post801837800038263652..comments2024-03-19T05:19:06.448-04:00Comments on Musings on Markets: Lazarus Rising or Icarus Falling? The GoPro and LinkedIn Question!Aswath Damodaranhttp://www.blogger.com/profile/12021594649672906878noreply@blogger.comBlogger17125tag:blogger.com,1999:blog-8152901575140311047.post-24158111592897873862016-06-13T18:22:05.170-04:002016-06-13T18:22:05.170-04:00@hemanth you should see professors most recent art...@hemanth you should see professors most recent article which covers how to account for uncertainty by attaching probability distributions to your valuation.<br /><br />http://aswathdamodaran.blogspot.com/2016/05/dcf-myth-32-if-you-don-look-its-not.html<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-19120457773131391802016-06-13T18:19:55.663-04:002016-06-13T18:19:55.663-04:00Hi professor,
With the benefit of hindsight, i am...Hi professor,<br /><br />With the benefit of hindsight, i am curious to know how the valuation would look like given the acquisition value of 26 billion dollars that MSFT eventually paid. Any thoughts/insights? Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-69328625375088510712016-04-01T11:00:40.545-04:002016-04-01T11:00:40.545-04:00Dr.Damotharan,
I see that you using simulation in ...Dr.Damotharan,<br />I see that you using simulation in your valuations lately. Its been a while since I have used simulations. Wondering which probability distribution curves you are using for your assumptions and what do you determine determine the variables of those input distribution curves ( other than mean). IF there is a detailed article on this, appreciate if you can point me to it.Hemanth Mandahttps://www.blogger.com/profile/06898007078875416663noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-83707400500778824872016-03-17T17:31:57.311-04:002016-03-17T17:31:57.311-04:00Professor. Do you think that the company's val...Professor. Do you think that the company's valuation is very sensitive to Capital Expenditure? The free cash flow for Linkedin turned negative in 2015 due to large Capex. If they keep investing at these rate and revenue cannot keep up, it would reduce their share price significantly. Tom Nguyenhttps://www.blogger.com/profile/01954697829660118738noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-46671197757021731722016-03-11T07:38:44.787-05:002016-03-11T07:38:44.787-05:00Professor Damodaran, what is your comment to David...Professor Damodaran, what is your comment to David Trainer´s recent 20$ valuation of LinkedIn? He writes about "hidden liabilities ... because LinkedIn finances its office space and data centers through the use of off-balance sheet debt in the form of operating leases" and a "pre-tax margin of 4%, which was achieved in 2014, but has since fallen to -2.7% over the trailing-twelve-months".Fhttps://www.blogger.com/profile/03618845135322067688noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-7816614074943098432016-03-09T10:06:44.289-05:002016-03-09T10:06:44.289-05:00Professor - would you happen to have any blog post...Professor - would you happen to have any blog posts on normalized vs. diluted EPS? When a company is reporting normalized earnings i.e. removing acquisition related expenses, forex, etc. Can you justify not using diluted EPS in a conservative valuation model? If you happen to have a previous blog post on this I'd like to read it if you can send a link. Thank you. Anonymoushttps://www.blogger.com/profile/05921730991398846183noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-59953594009821347832016-03-03T09:36:00.185-05:002016-03-03T09:36:00.185-05:00Can you please give more insight into your targete...Can you please give more insight into your targeted pre-tax margin of 18% for LNKD? This is far higher than they have ever achieved, and with revenue/employee only 1/3 of facebook, you would need to believe that they can grow without any additional hiring. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-69242719561189921552016-02-26T15:48:21.235-05:002016-02-26T15:48:21.235-05:00I net out reinvestment from EBIT (1-t) and reinves...I net out reinvestment from EBIT (1-t) and reinvestment = cap ex - depreciation + change in non-cash WC. It is just a short cut.Aswath Damodaranhttps://www.blogger.com/profile/12021594649672906878noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-10177193901348451152016-02-26T11:43:47.698-05:002016-02-26T11:43:47.698-05:00Professor, I have a question about the valuation m...Professor, I have a question about the valuation method.<br />FCFF is defined as EBIT*(1-t) + depreciation/amortization - investments<br />You take EBIT as a basis for your calculation, but I never saw you add the depreciation/amortization when calculating Free Cash Flow to Firm.<br />Why is that?Michalnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-27226301051365004512016-02-25T09:49:01.743-05:002016-02-25T09:49:01.743-05:00Anonymous,
It is tough not to repeat the same poin...Anonymous,<br />It is tough not to repeat the same points when you are talking about companies that are in the same business, online advertising. As for social media usage, scandals notwithstanding, do you really think that people are partaking less of it than ever before? In fact, I think that the growth of social media has been inexorable, with tweets becoming the way we get breaking news, Facebook becoming our mechanism for sharing with friends and relatives and Google becoming our gateway to finding stuff. I think that the point you raise is a legitimate one, which is whether you can use this growth in social media as a platform for growing revenues (from advertising, manpower or whatever else). That remains debatable, with Facebook being the shining exception. That is a point I made in my post on big market delusions and will be return to. This series, though, was never meant to confront macro issues, but micro ones. And just a note of caution. If you spend the bulk of your valuation time thinking about macro questions, you will miss the micro ones right in front of you.Aswath Damodaranhttps://www.blogger.com/profile/12021594649672906878noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-4517401661586774702016-02-25T09:00:41.756-05:002016-02-25T09:00:41.756-05:00Hi prof.I am sorry but I found this post boring an...Hi prof.I am sorry but I found this post boring and repeatitive . I understand you write on valuation however it astounds me that you do not deleve a little deeper into the whys rather than repeating yourself. I would rather enjoy the why of for example why is there a sudden decline in social media usage it is because people are now bored of the oh-so-fantastic new toy, are there more mediums of entertainment has social media reached its tipping point as far as the user base is concerned its social media pointless and ineffectual. Considering the type of scandals that seem to have briken out the seeming authenticity of the medium iself the utter lies and propaganda the utter chaos that seems to have decended on earth from the very advent of it leaves little for one to wonder why on earth social media still exists.Why it is important for valuation. I think it gives me a prospective short medium and long term about the very future of social media. I heard about something called brain to brain communication god forbid if that becomes useable on a consumer levelI do not know the links on brain to brain communication were genuine or not considering I found it on net where I also found myself lying on a slice of pizza I have serious doubts the social media future. Anyways I look forward your next post.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-90993520522195987442016-02-24T12:55:28.566-05:002016-02-24T12:55:28.566-05:00LNKD is interesting, but i do find your Rev assump...LNKD is interesting, but i do find your Rev assumption to be on the aggressive side in light of operating results the last few quarters. LNKD may have a lot of registered users, but the number who actually regularly visit the site is substantially lower. Add to it that the majority of page views come from a minority of members and at least to me, Rev growth of 25% may be quite challenging. 3rd party research that has been done for the company estimates there are 640 million professionals worldwide and with 400 million users, LNDK may have a hard time adding to these ranks. Of course, they could try to target the non professional workers, but that is speculative.<br />LNKD therefore in my view remains quite overvalued and substantial revenue growth is questionable. I would need to see some results supportive of your assumptions before i would invest in it.<br />Just like TWTR, LNKD having a lot of registered members does not mean that they can be monetized in any meaningful way. LNKD has made great strides in doing so since its IPO, but has very large challenges in achieving substantial growth going forward. Key will be getting users to become more engaged with the platform.stevenoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-35883744672720549052016-02-24T11:44:01.363-05:002016-02-24T11:44:01.363-05:00It's great to follow you, on blog and on Twitt...It's great to follow you, on blog and on Twitter also. Thanks for reaching so many things to us Ashutoshhttps://www.blogger.com/profile/01878765040325580861noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-44416105117047451392016-02-24T06:20:41.486-05:002016-02-24T06:20:41.486-05:00Dear Professor,
Thank you very much for every Mus...Dear Professor,<br /><br />Thank you very much for every Musings ob Markets' email. I enjoy them a lot. If you allow me to make you a suggestion I would recommend you a very simple change to them, which is to add the subject in the email so as to better identify it in our Prof Damodaran's folder. As an example, the current email would say: Musings on Markets-Lazarus Rising or Icarus Folding The GoPro and Linkedin Question! or maybe Musings on Market-The GoPro and Linkedin Question!<br /><br />Best regards,<br /><br />Claudiohttps://www.blogger.com/profile/09224739320587678577noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-12156113646893058502016-02-24T06:09:02.306-05:002016-02-24T06:09:02.306-05:00I am loving the videos at the end of the articles....I am loving the videos at the end of the articles. As I can see, you improve yourself time by time. <br /><br />Valuation tools, valuation of the week, short online class are some examples. Congratulations. You are very good.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-72137447432866406662016-02-24T06:04:20.276-05:002016-02-24T06:04:20.276-05:00Hi Aswath. You can valuate and analyse a company, ...Hi Aswath. You can valuate and analyse a company, but you don't need invest in it. You have the option of wait. For both companies (GoPro and Linkedln) the best choice is wait until they prove be more riskless. <br /><br />In tech's sector, efficiency is fatal. One mistep and you can be past. <br /><br />Can you valuate bank sector, please? they are volatile recently. European banks are sufering more. But american's banks are paying the bill too. Any spotlight here is welcome. <br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-1318622524898664352016-02-23T20:12:34.072-05:002016-02-23T20:12:34.072-05:00Thank You Mr. Damodaran for the multiple valuation...Thank You Mr. Damodaran for the multiple valuations of companies over past couple of weeks. Just curious on whether you added any of the mentioned companies (apple, Gopro,Linkedln Facebook) into your portfolio? <br /><br />TimAnonymousnoreply@blogger.com