SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Art of Investing
PICK 52.34+1.6%Dec 26 4:00 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
Recommended by:
stuffbug
To: Sean Collett who wrote (7621)10/3/2023 5:29:22 PM
From: Sun Tzu1 Recommendation   of 10713
 
I don't think that you can do value analysis that way.

IF and this is a big if, QRTE does not go bankrupt and can meet all its obligations, then QRTEP will be worth $100 (actually, more I think if I go over the details of the term sheet). So you will roughly gain 4x.

On the other hand, if they don't go bankrupt, then QRTEA will be worth only as much as their discounted cashflow model suggests less any risk premiums against future bankruptcies and market volatility. Their cashflow will depend on general economic conditions and a bunch of other thing.

You can't do a timewarp and assume that just because they are not going bankrupt their business and market multiples will just return to where it was at their height.

Of course, it is also possible that the conditions will be better than they were before and the A shares goes even higher. But my point is that without knowing the cashflow, you have no way of valuing the company, save for its parts.

PS Right now, I have no belief in business conditions getting better for most companies and expect that the next 6 months everyone will experience multiple contraction, whether or not they are profitable. But that is another story.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News