how can uber's share of billings be over 30%? the structure that they have is max 30% on first 20 rides given and then decreases going forward. That seems off to me
But there is no 1 Discount Rate or Cost of Capital... I have my own, you have your own. We value risk differently for each project/investment opportunity. We express our risk for particular investments through the discount rate. That's why in your first video, that VC said " your being to closed minded". (Paraphrased). He sees the risk of Uber different than you do. People think DCF are about 1 valuation number, it's a framework to judge investments, if not DCF what do we have?
I don't think the law of large numbers is represented in the right way here though. In probability theory, the law of large numbers is a theorem that describes the result of performing the same experiment a large number of times. Using it here is like saying to do the valuation a million times and the end result will be fairer. But that is not the case. The close cousin of this notion will be using a football field to present the end result as a region or using Monte Carlo simulation to estimate the coverage of the stock price but neither captures the essence of aggregation valuation. Aggregation valuation works (sometimes) because errors of the parts could go in different directions and that might help. But some other times, your parts are not uncorrelated and your result will be far off because you use the same wrong assumption the whole time. In short, more (agg. valuation) is not often less (errors), let alone right.
Never sick and tired about hearing you talk about anything Aswath. You’re an inspiration and a true professional.
Very well explained, you have a talent for distilling concepts into clear points that are easy to follow.
Brilliant explanation I'm complete agree because the assumptions and DCF model are correct for every company and in everytime.
Thank you so much! Great insight and data. Much needed!
Appreciate this, thanks for the vid!
Did Aswath Damodaran valued his youtube channel? I think we know the answer ;]]] Great (valuable) content btw.
Invaluable I suppose :)
how can uber's share of billings be over 30%? the structure that they have is max 30% on first 20 rides given and then decreases going forward. That seems off to me
But there is no 1 Discount Rate or Cost of Capital... I have my own, you have your own. We value risk differently for each project/investment opportunity. We express our risk for particular investments through the discount rate. That's why in your first video, that VC said " your being to closed minded". (Paraphrased). He sees the risk of Uber different than you do. People think DCF are about 1 valuation number, it's a framework to judge investments, if not DCF what do we have?
I don't think the law of large numbers is represented in the right way here though. In probability theory, the law of large numbers is a theorem that describes the result of performing the same experiment a large number of times. Using it here is like saying to do the valuation a million times and the end result will be fairer. But that is not the case. The close cousin of this notion will be using a football field to present the end result as a region or using Monte Carlo simulation to estimate the coverage of the stock price but neither captures the essence of aggregation valuation. Aggregation valuation works (sometimes) because errors of the parts could go in different directions and that might help. But some other times, your parts are not uncorrelated and your result will be far off because you use the same wrong assumption the whole time.
In short, more (agg. valuation) is not often less (errors), let alone right.