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Not a CFA like DFV, and not financial advice but here goes. A way to assess what any stock is valued is to take the DCF, but since it's nearly black box to the
by incognition 6y ago
Not a CFA like DFV, and not financial advice but here goes.
A way to assess what any stock is valued is to take the DCF, but since it's nearly black box to the shareholder for growth companies (no dividend), treat any interest payments on outstanding short float as part of the DCF. That means there's a growth directly associated with capitalization. so it makes sense that the capitalization becomes untethered with the business. Google’s ROE is about 12%, so 6-7% on the cap isnt great, but it’s not nothing either. The other side is if the short interest decreases that would collapse the cap sharply, but the longer the shorts wait, the less lucrative and difficult it could get.
Edit. Cost to borrow is at 50%! https://www.reddit.com/r/wallstreetbets/comments/l88i21/s3_says_we_aint_done/ https://www.reddit.com/r/wallstreetbets/comments/l88i21/s3_s...