Internet Stocks: Value and Trading Strategy. Rob Freund Petter Hellman Ole Hvidsten Jiong Shao Rick Solano. Main Points. Value in theory Internet shortcomings for traditional value Modifications to theory for Internet stocks Trading strategy Conclusion Questions. Value in Theory.
Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.
Total Market Capitalization of Industry
(e.g. Retail: $1.45T %, FCF Margin = 5%)
Expected Market Cap position of firm (PV $)
(e.g. Amazon: Market Share = 10%
MCAP = $145B)
Payoff to investors if firm successful
Current Market Cap of firm
(e.g. Amazon MCAP as of 8-31-99 = $14.14B)
Bet placed by investors
Current Value of firm using existing financial performance baseline
(e.g. Not Applicable - no earnings)
Price of bet influenced by factors affecting expected future outcome (e.g. starting QB breaks leg day before Superbowl) - IN THIS CASE, MARKET HAS SET 10-1 ODDS ON AMAZON CROSSING THE FINISH LINE IN THIS POSITION
Using a simply MCAP to Sales ratio to sort yields the highest return
Due to MCAP weighting - the index return has been significantly skewed by a few extraordinarily successful stocks