Altaba Inc. (formerly Yahoo) Message Board

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Technology Stocks : Altaba Inc. (formerly Yahoo)

AABA 19.63

0.0%

Nov 6 4:00 PM EST

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To: dwlima who wrote (14578)	10/9/1998 10:21:00 PM
From: Moominoid	Read Replies (1) of 27307

$22 was out of the hat job. My official estimate is $5.50. But that's based on expected earnings before the recent result so it is probably too low. When I revise it it could well be $10! My estimate is based on discounting expected earnings using the discount rate from the capital asset pricing model. As YHOO's beta is 2.06 this discount rate is very high. I also make very conservative assumptions on the future growth of earnings. In fact I assume that after 2008 (ten years time). YHOO would not be growing any faster than any other company. I use Zack's forecasts for the next year's earnings and then just reduce the growth rate mechanically after that. For comparison my estimate for MSFT is $45. Now given MSFT's monopoly powers and excellent history and liquidity I may well be overestimating the risk premium associated with its earnings. So $90 doesn't seem that unreasonable a price. One can see how alternative theories and assumptions could easily come up with that price. However, YHOO doesn't have any of these things going for it.

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