Amazon.com, Inc. (AMZN)

Discount cash flow analysis

Sell Overvalued by 92.6%

5% margin of safety What's this?

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How does this work?

This is an interactive analyst report for Amazon.com, Inc., based on a discounted cash flow valuation approach.

You can modify the assumptions and the valuation will be updated automatically. You can also save and share your valuation.

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Values in $ millions
2007 2008 2009 2010 2011 2012 2013 2014
 
                 
               
 

What will the revenues be in the future?

Growth beyond year three is driven by the terminal growth rate.

Sensitivity matrix

   
-1%
Discount Rate %
0%

1%
  -1% $58.87 $57.78 $56.75
Terminal Growth% 0 $59.40 $58.29 $57.23
  +1% $59.93 $58.80 $57.72

How does a change in discount rate or terminal growth affect valuation?

This table shows the sensitivity of the valuation to two key variables - the discount rate and the terminal growth rate

Valuations and comments

  • Valuecruncher created a new valuation of $351.48 (overvalued by 55.49%) - 11 months ago
  • Valuecruncher created a new valuation of $351.33 (overvalued by 54.67%) - 11 months ago
  • SethWellbourne created a new valuation of $143.66 (undervalued by 2.57%) - over 7 years ago
  • GordonGekko created a new valuation of $94.51 (overvalued by 22.17%) - over 7 years ago
  • beatallica created a new valuation of $74.74 (overvalued by 41.43%) - over 7 years ago
  • GordonGekko created a new valuation of $99.04 (overvalued by 24.82%) - over 7 years ago
  • SethWellbourne created a new valuation of $109.00 (overvalued by 10.39%) - almost 8 years ago
  • GordonGekko created a new valuation of $70.97 (overvalued by 9.0%) - 8 years ago
  • SethWellbourne created a new valuation of $53.54 (overvalued by 32.4%) - over 8 years ago
  • SethWellbourne created a new valuation of $65.61 (overvalued by 8.16%) - over 8 years ago
  • GordonGekko created a new valuation of $48.71 (overvalued by 5.58%) - over 8 years ago
  • TheCrunchBlog created a new valuation of $62.65 (overvalued by 10.45%) - almost 9 years ago
  • GordonGekko created a new valuation of $60.34 (overvalued by 25.51%) - almost 9 years ago
  • KiwiEMH created a new valuation of $81.16 (undervalued by 0.48%) - almost 9 years ago
  • GordonGekko created a new valuation of $83.39 (undervalued by 0.34%) - 9 years ago
  • GordonGekko created a new valuation of $76.27 (overvalued by 4.88%) - over 9 years ago
  • sethc created a new valuation of $58.29 (overvalued by 24.6%) - over 9 years ago
  • virtualmark created a new valuation of $44.07 (overvalued by 40.87%) - over 9 years ago
  • TheCrunchBlog created a new valuation of $59.00 (overvalued by 19.54%) - over 9 years ago
  • KiwiEMH created a new valuation of $78.46 (overvalued by 0.33%) - over 9 years ago
  • KiwiEMH created a new valuation of $79.54 (overvalued by 1.2%) - over 9 years ago
  • Sam created a new valuation of $58.11 (overvalued by 27.53%) - over 9 years ago

Comments

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The boring details

All amounts in millions Figures
Enterprise Value: 328,028
Net Debt (Long-term borrowings less cash): -1,830
Equity Value: 32,290
Number of Shares Outstanding: 417,000,000
Calculated value per share: $58.29

Enterprise Value is the present value of the post-tax cash flows for a business into the future.


Calcuation of EV

Where:

  • C1, C2, C3 - the cash flow in period 1, 2, 3, ...
  • r - the discount rate

To capture the cash flows into the future a terminal value is calculated via a perpetuity calculation -
based on the final years forecast post-tax free cash flow.


Perpetuity

Where:

  • Cn - the cash flow in the final forecast period.
  • LTG - the long-term growth rate
  • r - the discount rate
  • g - the terminal growth rate

The Capital Asset Pricing Model (CAPM) is used to determine the equity component in the discount rate.


CAPM model

Where:

  • rt - the risk free rate
  • t - the tax rate
  • B - the beta of the company
  • MRP - the Market Risk Premium

Valuecruncher uses an estimate of Weighted Average Cost of Capital (WACC) to determine the discount rate in the calculation.