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You project for as long as you can, but eventually you have use the growth model at the very end. Even before you get to that point you have project a growth mo
by samfisher83 11y ago
You project for as long as you can, but eventually you have use the growth model at the very end. Even before you get to that point you have project a growth model. So year 1 is 1.2A year 2 is 1.2^2A etc. So the growth rate is pretty important in creating valuation.
- leroy_masochist 11y agoYou're missing my point altogether. I'm aware of how DCFs work and you describe their mechanics accurately. My point is that the drop in Twitter's stock price has nothing to do with DCFs and more broadly, that DCF models are useful (and used) primarily as a means of comparing similar companies rather than as a "true measure" of a company's value.