How to Calculate Intrinsic Value (Updated Tesla & Alibaba Stock Examples)

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2 жыл бұрын

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Learning how to Calculate the Intrinsic Value of a stock like Warren Buffett and Mohnish Pabrai is critical to becoming a successful investor. In this video, I take you through my custom Intrinsic Value Spreadsheet and I show you step by step how to value a stock with examples for Alibaba and Tesla stock. I hope you enjoy the tutorial and find it useful!! As always, these are just examples and are NOT buy/sell/hold recommendations for any business mentioned.
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Пікірлер: 17

@patti1s0n 2 жыл бұрын

Great vid, very helpful to see how others do their valuations.

@investingiq 2 жыл бұрын

Thanks mate! I'm glad you found it helpful :)

@dq9405 Жыл бұрын

I love the point you mentioned about Yahoo finance. I thought it was absurd that other people on KZfaq were just taking that number at face value and plugging it in without questioning it. Thank you so much for showing how to calculate it ourselves!

@investingiq Жыл бұрын

I know right! It's crazy.. No problem at all :) I'm glad you found it useful!

@dq9405 Жыл бұрын

@@investingiq how do you accurately guess the growth rates? Can you do a walkthrough of how you research?

@investingiq Жыл бұрын

@@dq9405 my friend, I'd be lying if I said I knew how to accurately calculate future growth rates, and so would anyone else who says they can haha. I essentially just guess as well as I can while trying to be conservative. I try to understand the business as much as I can, including it's future prospects. Its past few years may give you some insight into what may happen in the future, although that's not always the case. It really depends business to business but I prefer to calculate growth rates the way I did for Tesla, rather than growing the present cash flow in to the future with a growth rate. I find doing that makes more sense. If you watch my older Tesla video and my recent Alibaba video, I think you'll find it useful. Thats how I prefer thinking about growth rates :)

@chrisaustralianfinance9204 2 жыл бұрын

Very helpful regarding the Alibaba example. I'm currently looking at purchasing some Alibaba at the moment (will be likely my 2nd or 3rd individual stock ever as I mainly stick to ETF's) and I found this video incredibly helpful. How much Alibaba are you currently holding Senan?

@investingiq 2 жыл бұрын

Thanks heaps Chris! That's awesome, what do you think of the company so far from your research? It's currently about 20% of my portfolio but I'm still buying at the moment so it could get up to 30-35% if low prices continue.

@chrisaustralianfinance9204 2 жыл бұрын

@@investingiq I like the company and I do agree with your assessment. I think alot of the low prices relates to all the risk/international relations problems that are currently occurring in the world and china's stance towards billionaires (jack ma). One thing that does concern me though is Munger just sold 50% of his stock. Brandon from new money has got a decent video on it but it concerns me that if someone as good as Munger is selling the stock, why should I think otherwise given most of my individual stock choices have blown up in my face!

@investingiq 2 жыл бұрын

@@chrisaustralianfinance9204 damn he beat me too it! I got one coming out today lol I share a few thoughts on why he might have sold :)

@chrisaustralianfinance9204 2 жыл бұрын

@@investingiq You'll be right mate. Could be worse. At least its still new news. You could be working on a video around the new ASIC guidelines for Financial Education (or Finfluencers).... Really missed the bus on that one....

@investingiq 2 жыл бұрын

@@chrisaustralianfinance9204 yeah I was thinking about making one on that topic too but I was too late lol.. I wish i had the speed of some people..

@ahmedxh Жыл бұрын

Brotherly advice don’t use multiple valuation. The only valuation that makes business sense is discounted cash flow to present value.

@investingiq Жыл бұрын

I'm not sure what you mean? In the other Alibaba video or in this video? I like using both methods to give me a fuller picture. Sometimes I care more about the future intrinsic value (estimate) than current intrinsic value, and sometimes it's the other way around. Depends how long I plan on holding the business for. DCF has its problems when you look further and further out, and a lot of the time the majority of the 'value' comes from the terminal multiple (if you use that over perpetual growth rate method)

@ahmedxh Жыл бұрын

@@investingiq First of all I hope you don’t take my comment the wrong way. I have learned from you and hope to reciprocate some knowledge. Trust me when I tell you this, multiple valuations don’t pertain to the intrinsic value of the asset. I understand it gets tricky to project future cash flows The longer you go out. But as Warren says” it’s not an exact science I don’t need a computer (Calculator) to know whether it’s gonna work or not, if it doesn’t scream buy at me I don’t”. My point is, you don’t have to be precise you just have to be remotely close. multiple valuations are selling estimators -and often a poor one-not intrinsic value appraisers. 😃

@investingiq Жыл бұрын

Not at all! I appreciate the kind words :) I understand where you're coming from. I should've been more clear that it's just one of many ways I use to value a business. I see you're point, but I also think it's a good tool to use alongside a traditional DCF to weigh the risk reward. I think it depends on time horizon too. Over shorter time horizons - Doing DCFs and knowing the current intrinsic value is critical, when you're trying to buy a $1 for 50c, and sell it for $1. Whereas over long time horizons - the quality of the business, returns on capital and the runway are more important than the current valuation, as long as it's not egregious.

@investingiq Жыл бұрын

Check out this thread on Twitter twitter.com/10kdiver/status/1399083401697628162?lang=en It's not as relevant to BABA as that's more of a short term hold for me (less than 10 years), but this is how I think about looking for investments over longer periods