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The astonishing bit of this otherwise vacuous article is that Morgan Stanley thinks Alphabet is undervalued by ~20%: In terms of Alphabet’s current value, Morg

The astonishing bit of this otherwise vacuous article is that Morgan Stanley thinks Alphabet is undervalued by ~20%: In terms of Alphabet’s current value, Morgan Stanley has a price target of $1,450

baybal2 7y ago
I don't understand how those public company people come with such estimates. I asked some, tried to wrap my mind around of what they sad, but I still don't understand them. Basically it's wildly convoluted guess based on looking what companies already doing a similar thing is valued. In the end, it usually ends up by people doing the this line of work calling their peers on an anonymously bought sim card, and asking for how much they will buy it for. I think, it is stupid
- darkerside 7y ago
  What you describe is likely one of multiple approaches, another of which (and arguably the most important) being fundamental analysis based on company financials.
- jbob2000 7y ago
  How else do you find the value of something, other than to ask others what they’d pay for it?
  - BubRoss 7y ago
    That's what you ultimately have to do, but you can take users, engagement, retention, growth and monetization over time compared to competition.
  - tim333 7y ago
    Discounted cash flow models are popular. Morgan Stanley probably did one to get the 20% undervalued number. Though they are still basically spread sheets with a lot of numbers you have to kind of guess in them.
    - marcusverus 7y ago
      This approach works for established companies, but breaks down when considering services like waymo, whose value is purely a matter of potential. Waymo is currently worth nothing (if not less) from a cash flow perspective, but potentially worth hundreds of billions in the future, with their effective market value lying at some (entirely subjective) point in between.
- konschubert 7y ago
  WeWork was valued at >60 billion by the same bankers who valued it at 20 billion a couple days later.

baybal2 7y ago

I don't understand how those public company people come with such estimates. I asked some, tried to wrap my mind around of what they sad, but I still don't understand them. Basically it's wildly convoluted guess based on looking what companies already doing a similar thing is valued. In the end, it usually ends up by people doing the this line of work calling their peers on an anonymously bought sim card, and asking for how much they will buy it for. I think, it is stupid

darkerside 7y ago
What you describe is likely one of multiple approaches, another of which (and arguably the most important) being fundamental analysis based on company financials.
jbob2000 7y ago
How else do you find the value of something, other than to ask others what they’d pay for it?
- BubRoss 7y ago
  That's what you ultimately have to do, but you can take users, engagement, retention, growth and monetization over time compared to competition.
- tim333 7y ago
  Discounted cash flow models are popular. Morgan Stanley probably did one to get the 20% undervalued number. Though they are still basically spread sheets with a lot of numbers you have to kind of guess in them.
  - marcusverus 7y ago
    This approach works for established companies, but breaks down when considering services like waymo, whose value is purely a matter of potential. Waymo is currently worth nothing (if not less) from a cash flow perspective, but potentially worth hundreds of billions in the future, with their effective market value lying at some (entirely subjective) point in between.
konschubert 7y ago
WeWork was valued at >60 billion by the same bankers who valued it at 20 billion a couple days later.