Wall Street Prep has created a DCF model that you can use for your own purposes if you'd like to check it out! It's different than mine but still could be a good starting point. www.wallstreetprep.com/knowledge/amazon-valuation-model/ They also have a great modeling course + a ton of other great courses you can check out and if you use my code RARELIQUID you'll get 20% off! gv142.isrefer.com/go/rliquid/rareliquid/
Hi, great videos I really appreciate you putting these kinds of high quality videos! It really been a great learning curve. In future could you make valuations of banks and financial institutions. I tried making a DCF for a bank but it gets really confusing owing to the fact that debt is not same for bank as it would to be a regular company. A video on that would really be amazing! Again thankyou so very much for these videos!!
@@shanefeller881 hii, thanks for the suggestion. I have never used a DDM before but while I was auditing the valuations course of Damodaran, he seemed pretty adamant about the fact that DDM are not much useful as most companies (especially financial institutions) never pay the fullest possible dividend that they can actually payout to the shareholders. So thereby he extrapolated that valuations based out of DDM's can never be close to the actual value of the company. Anyways thanks, I'll research and look into it.
@@skymaster9665Yeah the dividend discount model has a lot of limitations and is mostly used as a simple stock valuation technique in an introductury finance course.
Thank you so much for this insightful sharing ! Seeing how efficient you build this complex valuation model (well at least way more complex than regular excel user) is mind blowing to me. It was a really fun video! ^^
This video is amazing thanks for sharing. I think you may have made an error with the NWC. Given you have taken the NWC figure from the cashflow statement, you should be adding it to the unlevered free cashflow not subtracting it. For instance, the 2021 NWC figure of (19,611) is already negative (cash outflow from the cashflow statement) but you have minused that, which means you're actually adding it back. I think it needs to be EBIAT + D&A - CapEx + Change in NWC
Thanks for the video, Ben. Will chip away at it over the week. DCFs are generally well received! The tint on your glasses makes you look like the professor from Futurama 😅
Excellent video. I am not from finance background but I understood everything that great from your explanation I got to see how DCF is made thanks man.
Very great video! What is your opinion on the inclusion of stock based compensation in the free cash flow? Nowadays they play a major role for tech companies and can have an influence on the valuation.
*When it comes to investing, I'm so ignorant about it, I hereby ask; What's your say or thought for anyone with over $20k looking for the best ways to make good returns off it? I will appreciate any help here on how to do this*
@Lucy Bernardi Interesting, I've always been fascinated with investing and I need to start now. Could you possibly give more information on your Investment Professional and how I can reach out to her?
Yup, as of the latest quarterly earnings, management said they were too aggressive in their CapEx spend and are now overcapacity in logistics and AWS. So it's safe to assume their CapEx spend will be far less over the next 12-18 months in those departments until the demand catches up. However, they will of course continue to spend CapEx on their numerous loss-leading businesses, so I think the 5% CapEx we've seen in late 2010's should be expected.
love your videos! would you be willing to do a DCF for a company that does lending? like VISA or other lending products? i know their financial statements look different since they loan money, then are paid back over time
loved your analysis buddy, thanks for the great content. Just one question i have, how did you come up with the terminal growth rate? and what is the relevance of the TGR?
hi ben thanks for the video and detailed explanations. do you know of any good retail accessible recourses similar to factset? or what’s the best way to get access to such a database? thnx
Interesting to see how the fundamental analysis is done. But the risk of being off seems pretty high, because between now and 5 years later, a lot of things can happen. Unfortunately for the institutions, there's no choice, this is the way.
On the cash flow statement, they add back change in NOWC to get the Cash flows from operations. Why do you subtract the change in NOWC in order to get Free cash flow? I feel like if you calculated out the change in NOWC using the balance sheet then you would need to subtract it, but when using the cash flow statement it is accounted for based on its effects on cash. I.e. Inventory growth would be positive if you calculated change in NOWC using the balance sheet and would be negative if you calculated NOWC using the numbers on the statement of cash flows
can't really make a street based dcf without street estimates haha. also not really possible to just make solid projections without a lot of research resources
@@rareliquid yeah obv but isnt it also possible to calculate est. by yourself? I personaly really enjojed the trading comps videos, trying to build one myself now Huge thx for All your efforts
if we dont have access to the revenue growth then can we make assumptions on our own by looking at similar companies and coming with a generalized growth rate?
just to have a range because valuation doesn't get you to an exact correct figure. it's more about stress testing assumptions and seeing what you need to believe to arrive to a valuation
Hi Ben, great video. But I think I found an error, which I would like to quickly outline The error may be in calculating the 2022 present value accounting for the days passed already in 2022: You intend to discount (from 31st of Dec'22) to the present day and not to 1st of Jan'22 which is basically just half a year instead of the full year = I agree with the idea. However, your resulting PV for 2022 is roughly 50% worth of EOY 2022 (PV FCF), which is way too low. It should be very close to the EOY22 number not half of it, since the discount period is only half a year (not even a full one) Here is how I would code it to avoid formula mistakes: =DAYS360(TODAY();F5;TRUE)/360. Whereas "F5" = 12/31/2022 in my spreadsheet. That gives you the correct dicount horizon (Remainig days until EoY22 = "12/31/2022" minus "days passed until today") Hope that makes sense. Many thanks for all your content / I learn a lot. Best,M
yeah true i shouldn't have used the first full year of 2022 but took a shortcut. also good to use mid-year convention. will do this in the future to have the numbers be more accurate!
Hey Ben in this video at 23:00 Under cash flow items you are saying Capex as % of sales but calculated using D&A amount. What is the correct method can you please clear this i don’t know weather u corrected or not in this video I haven’t watched full video yet same thing u did for Change in NWC.
HEY why wehn u calculate CapEx % of sales you actually divide it by the d&A and not revenue, I got stuck here as of how tf is that possible, where u have 95% and its a small number of all the sales and should be like 2 or 1 percent. Am I mistaken or is it utterly a small mistake and slip off
Hey! Just wondering where you get your equity research, I have been looking all over but most places only sell to businesses. Also, would I get access to FactSet if I subscribe to your patreon? Thanks
yeah i only realized how loud it was after i filmed everything sorry! thought my mic wouldn't pick up the noise. gonna make sure to adjust the settings for future streams
Wall Street Prep has created a DCF model that you can use for your own purposes if you'd like to check it out! It's different than mine but still could be a good starting point.
www.wallstreetprep.com/knowledge/amazon-valuation-model/
They also have a great modeling course + a ton of other great courses you can check out and if you use my code RARELIQUID you'll get 20% off!
gv142.isrefer.com/go/rliquid/rareliquid/
used code rareliquid!
thank you! I used to have insomnia, but now I can fall asleep right away after watching your video
Hi, great videos I really appreciate you putting these kinds of high quality videos! It really been a great learning curve. In future could you make valuations of banks and financial institutions. I tried making a DCF for a bank but it gets really confusing owing to the fact that debt is not same for bank as it would to be a regular company. A video on that would really be amazing! Again thankyou so very much for these videos!!
Look up dividend discount model.
@@shanefeller881 hii, thanks for the suggestion. I have never used a DDM before but while I was auditing the valuations course of Damodaran, he seemed pretty adamant about the fact that DDM are not much useful as most companies (especially financial institutions) never pay the fullest possible dividend that they can actually payout to the shareholders. So thereby he extrapolated that valuations based out of DDM's can never be close to the actual value of the company. Anyways thanks, I'll research and look into it.
Hey, Great, actually i am also Making DCF but i am also getting some problems. So can we discuss it? Beacuse it will be helpful for both of us.
Never do a DCF for a bank. Use a Residual Income Valuation model instead.
@@skymaster9665Yeah the dividend discount model has a lot of limitations and is mostly used as a simple stock valuation technique in an introductury finance course.
Thank you so much for this insightful sharing ! Seeing how efficient you build this complex valuation model (well at least way more complex than regular excel user) is mind blowing to me. It was a really fun video! ^^
⏱Timestamps⏱
0:00 - Agenda
1:09 - Disclaimers and Notes
4:45 - Amazon Situation Overview
8:02 - Wall Street Prep
11:07 - DCF Modeling Starts
25:40 - Revenue Projections
47:25 - EBIT Projections
1:16:00 - Taxes and Cash Flow Item Projections
1:33:40 - Calculating Free Cash Flow, Enterprise Value, Share Price
1:45:27 - Wall Street Prep
1:46:49 - Discussing DCF Findings
Great video. Would be great if you can make a video on LBO, just like you do for DCF.
This video is amazing thanks for sharing. I think you may have made an error with the NWC. Given you have taken the NWC figure from the cashflow statement, you should be adding it to the unlevered free cashflow not subtracting it. For instance, the 2021 NWC figure of (19,611) is already negative (cash outflow from the cashflow statement) but you have minused that, which means you're actually adding it back. I think it needs to be EBIAT + D&A - CapEx + Change in NWC
Thanks for the great video. Can you share a list of the sources used to gather the information necessary for the DCF please? Great work!
Thanks for the video, Ben. Will chip away at it over the week. DCFs are generally well received!
The tint on your glasses makes you look like the professor from Futurama 😅
This model actually was very accurate. Well done.
Excellent video. I am not from finance background but I understood everything that great from your explanation I got to see how DCF is made thanks man.
Ben,
You are the Greatest.
Thank You
Very great video! What is your opinion on the inclusion of stock based compensation in the free cash flow? Nowadays they play a major role for tech companies and can have an influence on the valuation.
*When it comes to investing, I'm so ignorant about it, I hereby ask; What's your say or thought for anyone with over $20k looking for the best ways to make good returns off it? I will appreciate any help here on how to do this*
@Lucy Bernardi Interesting, I've always been fascinated with investing and I need to start now. Could you possibly give more information on your Investment Professional and how I can reach out to her?
Pokémon cards
Buffet says buy Sp500 index fund and hold for 20 years.
This is great - thank you!
Yes the future Capex is very very high in the model, management said the Capex of 2021 was the highest and they partially overinvested.
i'll look into that some more, thanks!
Yup, as of the latest quarterly earnings, management said they were too aggressive in their CapEx spend and are now overcapacity in logistics and AWS. So it's safe to assume their CapEx spend will be far less over the next 12-18 months in those departments until the demand catches up. However, they will of course continue to spend CapEx on their numerous loss-leading businesses, so I think the 5% CapEx we've seen in late 2010's should be expected.
loved this. looking forward to further analysis with different capex assumptions
Great Model, AMZN is around 88$ currently. Great assumptions
Can you please do a full dcf analysis on Apple?
Very Insightful, thanks for sharing!
love your videos! would you be willing to do a DCF for a company that does lending? like VISA or other lending products? i know their financial statements look different since they loan money, then are paid back over time
Excel video would be very helpful, keep up the good work!
Hey could you make a video of exporting files from edgar and the moving them over to a different excel in order?
loved your analysis buddy, thanks for the great content. Just one question i have, how did you come up with the terminal growth rate? and what is the relevance of the TGR?
Thanks for the high quality video. May I ask where can we access to the valuation from investing firms like cowen credit suisse and Morgan Stanley
Very nice! Thank you! The keyboard noise just annoys a little… maybe putting the mic somewhere else would help 😉
hi ben thanks for the video and detailed explanations. do you know of any good retail accessible recourses similar to factset? or what’s the best way to get access to such a database? thnx
1:24:49 Why is Cowen doing like that?
Because they needed to unload the position they were holding Or report done by interns, either way
Can you do one fire theoretical private companies
Interesting to see how the fundamental analysis is done.
But the risk of being off seems pretty high, because between now and 5 years later, a lot of things can happen.
Unfortunately for the institutions, there's no choice, this is the way.
On the cash flow statement, they add back change in NOWC to get the Cash flows from operations. Why do you subtract the change in NOWC in order to get Free cash flow? I feel like if you calculated out the change in NOWC using the balance sheet then you would need to subtract it, but when using the cash flow statement it is accounted for based on its effects on cash. I.e. Inventory growth would be positive if you calculated change in NOWC using the balance sheet and would be negative if you calculated NOWC using the numbers on the statement of cash flows
I was wondering the same, the NWC part is not completely clear to me
Needed this!
dude this is great
Is there any way to get those detailed estimates without FactSet?
Hey
Why havent you included the balance sheet in this model? Any specific reason?
Also thankyou for this video, indeed helpful
Hi, could you maybe do one without street estimates? Bc its kind of hard to get the data xD Thx for you work and the great content :)
can't really make a street based dcf without street estimates haha. also not really possible to just make solid projections without a lot of research resources
@@rareliquid yeah obv but isnt it also possible to calculate est. by yourself?
I personaly really enjojed the trading comps videos, trying to build one myself now
Huge thx for All your efforts
Did you get factset via JPM? Can you still use it now you've left?
@Señor Taco well its subjective at the end of the day ... but yes, obv the more accurate the assumptions the better the model
if we dont have access to the revenue growth then can we make assumptions on our own by looking at similar companies and coming with a generalized growth rate?
Hi, where did you download the info from? I don't know where to download it
May I know what should be done if there isn't access to factset? Thanks
Can i get the source from where i can download the data
also stock splits make option premiums cheaper which can affect share price.
Hey, I liked your video but please clear why did you made 3 assumption (Conservative, street case and optimistic)??
just to have a range because valuation doesn't get you to an exact correct figure. it's more about stress testing assumptions and seeing what you need to believe to arrive to a valuation
@@rareliquid okay thanku
Hi Ben, great video.
But I think I found an error, which I would like to quickly outline
The error may be in calculating the 2022 present value accounting for the days passed already in 2022:
You intend to discount (from 31st of Dec'22) to the present day and not to 1st of Jan'22 which is basically just half a year instead of the full year = I agree with the idea.
However, your resulting PV for 2022 is roughly 50% worth of EOY 2022 (PV FCF), which is way too low. It should be very close to the EOY22 number not half of it, since the discount period is only half a year (not even a full one)
Here is how I would code it to avoid formula mistakes:
=DAYS360(TODAY();F5;TRUE)/360. Whereas "F5" = 12/31/2022 in my spreadsheet. That gives you the correct dicount horizon
(Remainig days until EoY22 = "12/31/2022" minus "days passed until today")
Hope that makes sense.
Many thanks for all your content / I learn a lot.
Best,M
yeah true i shouldn't have used the first full year of 2022 but took a shortcut. also good to use mid-year convention. will do this in the future to have the numbers be more accurate!
It's good and all, but he did not show the most important stuff: how to get the actual data and how to find equity research for reference
where do you get your equity research reports from? are they free?
Hey, just wondering why didn't you forecast the changes in NWC under the cash flow items?
You should take a look at Nautilus($NLS), they're valued below liquidation, quite rare.
Hi Ben, can you tell us how to gain access to the analyst valuation report?
I believe your % Of Changes in Sales for NWC Change is calculated incorrectly, I believe you divided NWC by D&A rather than Revenue.
Hey Ben in this video at 23:00 Under cash flow items you are saying Capex as % of sales but calculated using D&A amount. What is the correct method can you please clear this i don’t know weather u corrected or not in this video I haven’t watched full video yet same thing u did for Change in NWC.
It sounds like you’re using a mechanical keyboard, which model do you use/is your favorite for financial modeling?
Hi, can someone enlighten me on how to get the reports he used for the EBIT?
How did you get access to the analyst reports ?
hi great explanation. Could you please share the Morgan Stanley pdf? didn't find it on internet
your changes in nwc is way off from if you calculated if from the balance sheet
row 28 -> you calculated NWC as a % of D&A...not sales
Hi Ben, How can you get the sheet with all financial stats for future report? Thanks
how does a DCF model respond to high inflation market conditions, does the inflation have to be accurately predicted as well?
usually that can be represented with a higher WACC
HEY why wehn u calculate CapEx % of sales you actually divide it by the d&A and not revenue, I got stuck here as of how tf is that possible, where u have 95% and its a small number of all the sales and should be like 2 or 1 percent.
Am I mistaken or is it utterly a small mistake and slip off
You use data that a lot of us are unable to get, if you could do another one with data that is more readily available that would be great!
Hey quick question, where do you get these reports from? Cant find them myself...
You can go to www.sec.gov/edgar/searchedgar/companysearch.html and type in the ticker you need.
@@Myopinion23 Appreciate the help but I mean these equity reports he pulled from morgan stanley or cowen...are they available for free ?
how can i access research reports? I am not able to access factset.. How can I get access to factset or other sources to access equity research?
Can you make a video on sensitivity analysis please??
Look into his Google valuations he made a sensitivity table there.
Hey! Just wondering where you get your equity research, I have been looking all over but most places only sell to businesses. Also, would I get access to FactSet if I subscribe to your patreon? Thanks
Is there a way to get a private class? Ill pay for it.
Could you share the template that you made on the video? Thanks!
and why do u only take in count long term debt? Why dont use short and long term liabilities??
How old where you, when you first started out as an investment banker?
Isn't 10.5% a high WACC for the base case - especially for a company the size of amazon?
Also what an informative video! So appreciative of your content it has helped me develop my modeling skills exponentially!
Only 167 days have passed since the beginning of the year though
@23:54 - how come you divide change in NWC by change in D&A vs. change in revenue? Is this correct?
ah that's an error on my end thanks for catching this!
Can you code it in Python?
Great vid. Thanks. Any chance you could do paypal?
As of today (07/14/2023), Amazon stock price is exactly 134, as is your optimistic case.
hello, what's the name of the website you downloaded the financial statements from? cant really undestrand when you said them the video . thanks
where can i download company financial data into excel for free
where did you download those IS figures of amazon kindly paste the link
i couldnt download the forecasting part
couldn't i get the excel sheet please
Bro can you do a video on using a keyboard instead of mouse on excel because wtf
I'll buy amazon if it hits 1 dollar. Everything else hit all time lows. LOLs.
I like your content but this video is not worth watching 2 hours.
Your mechanical keyboard is beyond annoying
yeah i only realized how loud it was after i filmed everything sorry! thought my mic wouldn't pick up the noise. gonna make sure to adjust the settings for future streams
@@rareliquid loved how your keyboard sounded. I think it adds a certain quirky to how fast you go through all the cell functions.