Cases in finance case 12 valuation of common stock what are we really worth

We just need to come together, create a better one, and market it to the same investors that are already using them. If independent appraisers got together and did this, every other hybrid product would become obsolete. The PCR is then sent to an appraiser to aid them in a desktop appraisal. The sales pitch for these hybrid products is that once the appraiser gets comfortable with the process, they should be able to knock out an assignment in about an hour.

Cases in finance case 12 valuation of common stock what are we really worth

AMZN shares soared the past several years, making its stock a form of currency to attract top talent and impacting cash flow. Glimpses of Shoeless Joe. Tellingly, these are merely a handful of the many excellent Amazon analyses that can be found on Seeking Alpha. This is a common view that draws from the theory of Efficient Markets Hypothesis EMH and the notion that markets are forward-looking price discovery mechanisms with nearly flawless precision.

The following slide represents an appropriate analogy for the current "valuation" metrics being applied by many "investors" and sell-side analysts to AMZN shares. Consider the race to be the first trillion dollar market cap in the context of which one of the current Big Tech behemoths will be the first to close a session in thirteen digits.

Will it be Apple?

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Or some other company decades from now? In the slide above, you see an oil painting by the French Impressionist Paul Gaugin.

Take a very close look at it and ask yourself how much it is worth. This should be easy since the price paid for "When Will You Marry? Incidentally, Gaugin was a stockbroker in France before he dropped out of the business after the Paris stock market crashed in and he turned his pursuits entirely to art, eventually relocating to Tahiti and Marquesas Islands in the South Pacific.

Truly, Gaugin makes an excellent example since he believed the market prices in Paris in were correct, only to learn the following year that he was wrong and their crash ended his career in the stock market. Simple supply and demand.

There is only one problem with this idea. The painting in the slide above is not "When Will You Marry? Unless someone was an art connoisseur, or a fine art dealer specializing in French Impressionists, most folks would not know the difference between the two Gaugin oil paintings.

Similarly, most "investors" do not understand even the basics of what Amazon is on a fundamental level. Most folks think of Amazon simply as an e-commerce behemoth that is decimating brick and mortar retail and poised to become a dominant grocer with its Whole Foods acquisition and the ramping of Amazon Go cashier-less stores nationwide.

While those facets may apply generally, they do not quite capture the true business model of the company in any meaningful way. Furthermore, these folks actually believe that buying AMZN shares is an "investment," yet the company pays no dividend, has not meaningfully bought back shares, and, in reality, has no capital return mechanism at all for shareholders in the foreseeable future.

Essentially, an endless array of capital expenditures in search of the next unicorn AWS-type of tech gold mine. In the slide above, you see the real "When Will You Marry? Take a good look at this one too.

Ask yourself why, qualitatively, this painting is valued so much higher than "Tahitian Women on the Beach" on a quantitative, monetary basis.

Cases in finance case 12 valuation of common stock what are we really worth

This painting has much in common with AMZN shares.I recently posted a Guest Blog Entry at the Smarter Wallet blog entitled Stock Market Strategy: Market Timing Based on Long-Term Views.. Juicy Excerpt: If prices can be wildly wrong in the short term but must be roughly right in the long term, it should be possible to know in advance which way prices are headed (in the long term only, not in the short term) just by knowing the valuation .

Sep 25,  · In the graph below, we have broken out just the 12 cent options from the layered cake above. As you can see from this graph, the 12 cent options are worth nothing until the company is worth .

Issuu is a digital publishing platform that makes it simple to publish magazines, catalogs, newspapers, books, and more online. Cases in finance 2nd edition by demello solutions manual. Time Value of Money Case Corporate Bonds-They Are More Complex Than You Think; Bond Analysis and Valuation Case How Low Can It Go?; Application of Stock Valuation Methods Case What Are We Really Worth; Valuation of Common Stock Case The Lazy Mower: Is It Really Worth .

Consulting to Finance: How to Network, Tell Your Story, Spin Your Resume, and Dominate Your Investment Banking and Private Equity Interviews. The main purpose of equity valuation is to estimate a value for a firm or its security.

A key assumption of any fundamental value technique is that the value of the security (in this case an.

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