That's because CAPM isn't the only way to price stocks. Some stocks can be priced like options, if they have contingent cashflows. Consider a biotech startup wi

That's because CAPM isn't the only way to price stocks. Some stocks can be priced like options, if they have contingent cashflows. Consider a biotech startup with a product coming to market. If they get FDA approval, that company is probably worth a lot! But if they don't, it might be worthless. Similar for an oil & gas company drilling for resources in a new area. You might like checking out Aswath Damadoran's videos on valuation https://www.youtube.com/watch?v=znmQ7oMiQrM#t=9m23s https://www.youtube.com/watch?v=znmQ7oMiQrM#t=9m23s.