tag:blogger.com,1999:blog-8152901575140311047.post335089665754793522..comments2024-08-03T02:04:08.986-04:00Comments on Musings on Markets: Insights on VC Pricing: Lessons from Uber, WeWork and Peloton!Aswath Damodaranhttp://www.blogger.com/profile/12021594649672906878noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-8152901575140311047.post-72892680791915129672019-09-27T11:14:22.691-04:002019-09-27T11:14:22.691-04:00with 1bln revenue the company is only worth 5-6 bl...with 1bln revenue the company is only worth 5-6 bln , that is what the maorket it pricing it today ~24$manuvnshttps://www.blogger.com/profile/04992274678972470512noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-62120772103029630442019-09-18T10:48:00.191-04:002019-09-18T10:48:00.191-04:00Interesting post, as usual. Thank you for posting....Interesting post, as usual. Thank you for posting.<br /><br />Regarding the share price simulation for Peloton, why is the distribution asymmetric given that the variables assume a normal distribution for cost of capital and linear distribution for operating margin and revenue growth? Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-78852194280633773312019-09-18T01:33:13.231-04:002019-09-18T01:33:13.231-04:00Thank you for this thought provoking post Professo...Thank you for this thought provoking post Professor Damodaran! Some questions about how you think about discount rate and valuation:<br /><br />How should I approach valuing Peloton if I intend to hold the stock forever (or if it were remaining a private company) and I have a required return of 20% p.a.?<br /><br />1) Main approach would be to forecast the most reasonable case (it's currently a success case), discount those cash flows at 20% and ignore / set probability of failure to 0%.<br />2) I could run several different scenarios - success case, weak case, failure case and probability weight those to get an expected value scenario, and discount that at 20%<br />3) I could run the success case but discount at a higher rate (say 30-40%) to account for the risk<br /><br />Finally my last question is about the reinvestment assumption - especially for tech companies, can't you make the case that the growth investments are embedded in your operating expenses (i.e. a function of the EBIT margin assumption)?<br /><br />Thanks so much for making me think hard about this!Hahnnoreply@blogger.com