Adding some additional notes to some of you finance nerds out there! Non-controlling interest = the remaining ownership value when company A owns more than 50% but less than 100% of company B. So if Facebook owned 80% of Twitter, the remaining 20% would be non-controlling interest. This is added into the Enterprise Value formula because if (given our example) you wanted to buy 100% of Facebook and 100% of all its assets, you would need to pay for the 20% of Twitter that Facebook doesn't own (i.e. the non-controlling interest) Preferred stock = another class of equity with special rights, usually in the form of dividend payments. Preferred stock usually doesn't have any voting rights but preferred stock shareholders are paid out before equity holders in the case of a bankruptcy (but are paid after debt holders). You add this into enterprise value because to purchase 100% of a company, you need to pay the preferred stock holders as well. Other common types of multiples = Enterprise Value / EBITDA or EBIT, or Equity Value / Net Income or Levered Free Cash Flow. You use Enterprise Value for the former because EBITDA and EBIT don't take debt holders into account. Net Income and Levered FCF implies that you have paid interest payments to your debt holders, so should only be attributable to equity holders, so that's why you use Equity Value. Lastly, as I mentioned in the video, normally you want to be looking at FORWARD financial metrics like EV / 2022 sales rather than LTM sales. This is because investors are always looking towards the FUTURE rather than in the past to make investments. But for our purposes, since forward metrics are hard to acquire, looking at the most recent last twelve months is a helpful benchmark vs. not looking at valuation at all. Feel free to leave any questions below if you have any. Thanks!
Thanks for the video! I find sales multiple to be a key metric when it comes to those companies with negative ebitda. Btw i look forward to watching the dcf model/valuation video as well.
Your videos are great! Learnt a lot from them. Thanks Liquid!!! The video helps me gather valuable insights to make my investment decision, selling puts exec@30 for 2022.
Good stuff. I appreciated this one and the other Coupang video you made. Any chance for an update video on Coupang as the price has dropped significantly to your 4x sales target? Also would be interested to hear your take on Q2 earnings. Thanks!
2:25 terms 3:05 !print important terms 5:55 how much more investors are willign to pay for each dollar in earning in the last 12 months 8:25 average for competitors 8:35 coupang scaling but worst margins 10:15 limited growth 11:30 dca in based off of revenue growth
Here's the video I asked about! Very useful thanks but I heard alot about a competitor called 11Street which would have been a good idea to add in your comparison I believe. And yes a discounted cashflow analysis would also be nice eventhough it works more with value stocks rather than growth stocks of new companies where not a lot of history is there to track. Well done, subscribing!
If you could make some videos about creating finance models or sth like that on Excel would be super great!!! But great content as always and keep it up Ben!
Hey Ben! would be great if can explain how the non listed companies are valued. I'm myself and IB Tech guy, given the tech boom tons of companies opting to list so would be great if can cover that as well
Thank you so much! I look forward to you making more of these educational videos on financial analysis. I think a lot of younger generation lack these finance knowledge both for valuing stocks and managing companies e.g. if people wanna start businesses or scale :D SUBSCRIBED!!
Great content as always Ben! What's your opinion on the current economy and markets with yields increasing and expected inflation? Have you adjusted your portfolio to value stocks from growth? I appreciate your opinion and maybe you can create some content on macro conditions as well.
I hold both value and growth stocks to balance out my portfolio at the moment. However, I do plan to trim the value stocks (oil, airlines, etc.) in the future as I think there is more limited upside. For my growth stocks, I am more of a buy-and-hold investor for the long run and only trim positions if my confidence in any of the companies decrease
Great video thank you! I’d be interested in more analysis on how you chose the multiple range to invest in the end - is it something that just comes from experience covering the tech space or is there more of a method to it?
you use the multiples peers are trading at but in this case it wasn't really easy to do that since the competitor multiples were all over the place. with time though you start to get a feel for what companies should be trading at
Great stuff, thanks for sharing! Curious if I subscribe the membership, can I also request to add more stocks valuations into the excel sheet over the time?
Now it is a very good price to coupang yes ? can they grow in the long term ? i mean south corea e commerce is nearly 90% alibaba is a better buy now still ? (i have a lot of that ) thank you for answer
Excellent, thanks for the education. Keep it up. Sorry, I am not signed up on your patreon coz I am a cheap skate, Not much of an Equity value to speak of ;)
Suppose you have forwards revenue projections for the next three years, and you're using EV/Sales. When working out the implied EV from the sales multiple, what would you normally do to work out the market cap? Isn't it a little difficult to forecast what the debt and cash-on-hand figures would look like three years from now? Is EV/Sales still appropriate in this scenario, in your opinion?
Where exactly can I find a correct information of number of shares for a company? Because when I looked at Yahoo Finance, Stock price × Shares Outstanding supposed to be the market cap, but it didn't add up for some companies. Thanks!
it's pretty tricky to find the true fully diluted share count. for basic shares you can find the number of shares on the cover (first page) of the latest quarterly earnings filing (go to bamsec.com for this) for dilutive securities i would google search it but you need to use the treasury stock method and calculate a lot of things like warrants, options, convertible bonds, etc. not really worth it tbh
@@rareliquid Thanks so much for very supportive reply! I actually changed the number of shares based on the market cap and stock price, because I don’t think either of them could be wrong, but am I wrong?
What do you think of SE? Although they have a large market yet to penetrate, other competitors can emerge in coming years in the same areas, giants like Amazon or assume Coupang decided to enter those markets to increase its revenue. Secondly, SE got overvalued in this COVID period, and why wasn't this hype felt before Jan'20? COVID was a revenue driver for SE, and I din't see same growth rate in coming years. You showed the revenue multiple, but it'd be good to see the losses/earnings & P/E ratio.
UPDATE VIDEO ON COUPANG? It's been trading lower and lower and the earnings doesn't seem like it's too hot. Would also love to see a video on how to actually evaluate a company's earnings report What metrics to look for? And for example how come sometimes companies beat Earnings estimate but still go down? There also seems to be a trend that if a company misses earnings, it shoots down on the earning day, but rebounces the next day (market absorbed news?) and vice versa, a company beats earnings, goes up on earning day, but trades lower the next day Would love your thoughts on this
You are comparing apples and oranges on EV/Revenue. Most of CPNG's revenue is 1P, meaning 100% of GMV is recognized as revenue. Meanwhile, both SE, MELI are 3P players, and only recognize net revenue they take as a fee. Same goes for eBay. The only pure comp is JD in that list. If you look at EV/GMV you can probably adjust for that revenue recognition difference.
Ah makes complete sense and I should've definitely looked at how the companies were recognizing revenue! Knew it was a bit fishy that SEA and MELI's multiples were so much higher. Makes me think a 3x-5x LTM sales multiple may make more sense then for Coupang but will have to adjust all the numbers and rethink the analysis. Anyhow, this is an important lesson / adjustment for everyone to see so thank you for catching this Victor! To everyone: the process of trading comps I showed in the video still stands and is the main takeaway. Trading comps alone and looking at numbers / multiples alone is never enough to justify valuation and it's always important to look into a set of companies and dig through filings to understand the reasons behind all the numbers!
You are still comparing apples with oranges. SEA and MELI operate in developing countries which does not have good infrastructure for logistics. Therefore, the only viable model is 3P players. Meanwhile, SK already has a ton of 3P player exist even before Coupang such as GMarket, Auction, Ticket Monster... That model is doing fine but cannot grow bigger because SK consumer is more demanding on the service. That's why Coupang stands out because they build out the best end-to-end shopping experience. Also, don't forget that Coupang has Coupang Eat and Coupang Play which means their TAM is bigger than it looks. Food delivery in South Korea is growing big and also the 3rd biggest market in the world. Coupang invests heavily into logistics to catch the growth of both industries. And they invest in Coupang Play to keep consumers stay in their ecosystem. Coupang also has the dominant player advantage so it's different with JD. JD EV/GMV is so low because they have to fight the bigger player Alibaba which means more risks. I still think rareliquid valuation makes sense and reasonable. Coupang has a high chance to grow bigger into multiple sections as long as they invest their capital smartly. SEA and MELI valuation actually looks more bubble to me. Their model is similar to Ebay and Ebay EV/GMV is just 4x PS: rareliquid, can you talk about Pindoudou case? I'm so curious as to why that company was value at 200 billion with less than 10 billion revenue and 1 billion net loss.
not yet actually as i'm aiming for the 30s! things can always change after I post my videos so that's why I always say to treat them as a part of your research and not rely on what I say
Can you provide insight on Dropbox $DBX? It has great potential for growth while maintaining consistent cash flow while accumulating new companies like DocSend and HelloSign.
Adding some additional notes to some of you finance nerds out there!
Non-controlling interest = the remaining ownership value when company A owns more than 50% but less than 100% of company B. So if Facebook owned 80% of Twitter, the remaining 20% would be non-controlling interest. This is added into the Enterprise Value formula because if (given our example) you wanted to buy 100% of Facebook and 100% of all its assets, you would need to pay for the 20% of Twitter that Facebook doesn't own (i.e. the non-controlling interest)
Preferred stock = another class of equity with special rights, usually in the form of dividend payments. Preferred stock usually doesn't have any voting rights but preferred stock shareholders are paid out before equity holders in the case of a bankruptcy (but are paid after debt holders). You add this into enterprise value because to purchase 100% of a company, you need to pay the preferred stock holders as well.
Other common types of multiples = Enterprise Value / EBITDA or EBIT, or Equity Value / Net Income or Levered Free Cash Flow. You use Enterprise Value for the former because EBITDA and EBIT don't take debt holders into account. Net Income and Levered FCF implies that you have paid interest payments to your debt holders, so should only be attributable to equity holders, so that's why you use Equity Value.
Lastly, as I mentioned in the video, normally you want to be looking at FORWARD financial metrics like EV / 2022 sales rather than LTM sales. This is because investors are always looking towards the FUTURE rather than in the past to make investments. But for our purposes, since forward metrics are hard to acquire, looking at the most recent last twelve months is a helpful benchmark vs. not looking at valuation at all.
Feel free to leave any questions below if you have any. Thanks!
I learnt more in this 14min lecture than my 3hour lectures in Uni! THANK YOU!!
Loved how wholesome the analysis was and the simplicity with which you explained it. Thank you so much!
This guy is gold I'm just gonna like everyone of his videos beforr even watching and leave a thank-you note as much as possible
I really liked the analysis! Thanks for the value Rare Liquid! Keep up the good work!
Please more of these vids!!! They are very educational and easy to pay attention to.
Really informative! Not really because all the things were new to me, but because how you presented them!
Really good video on one of many valuation metrics. Nice job in keeping it simple and to the point.
amazing form, thank you for video!
Dude, you rock! Awesome summary in a clear and simple way. Keep it coming
Thanks! Will do!
You've got a new subscriber. Thanks so much for sharing your wealth of financial knowledge, you're a legend mate! Keep it up.
Absolutely loved this video!
Ben blessing us again with his fire knowledge! Thanks again brother :)
aha thank you! nice username btw haha
Tremendous value in this vid, mate, thank you so much. Liked and subscribed of course! A video on DCF analysis would be highly appreciated!
will make it in the future!
Bro this is awesome. Like so awesome.
Came for the CPNG DD. Subscribed because I like your content and how you present your information
Welcome aboard!
Great video I wish you made more of these!!!
thnx for the information, valuable knowledge!!!
Thanks for the video! I find sales multiple to be a key metric when it comes to those companies with negative ebitda. Btw i look forward to watching the dcf model/valuation video as well.
yup for most growth companies sales multiples is all you are able to look at for that exact reason haha
You basically just retaught me my finance class . Not sure if I should mad or happy . Good thing I was on sports scholarship. Love the content
glad you found it helpful!
great content, thank you
Just subscribed. This is very helpful, thank you!
Thanks for the sub!
Thanks for the analysis! Super clear 😊
no problem nicole!
Exactly the knowledge I needed to learn
🙌
Thank you for this. Just subscribed 👍🏿
Thanks for the sub!
Thanks. Very practical approach and heavily mingle with my studies. Good to see, i will stick around.
Glad it was helpful!
Solid work man!
thank you sean!
Your videos are great! Learnt a lot from them. Thanks Liquid!!!
The video helps me gather valuable insights to make my investment decision, selling puts exec@30 for 2022.
Solid work as always!
Thank you! Cheers!
Good stuff. I appreciated this one and the other Coupang video you made. Any chance for an update video on Coupang as the price has dropped significantly to your 4x sales target? Also would be interested to hear your take on Q2 earnings. Thanks!
You are awesome + top notch content!
thank you so much!
Great video! Keep up the good work. Very through
thank you addison!
2:25 terms
3:05 !print important terms
5:55 how much more investors are willign to pay for each dollar in earning in the last 12 months
8:25 average for competitors
8:35 coupang scaling but worst margins
10:15 limited growth
11:30 dca in based off of revenue growth
DCF sounds great. You could also do balance sheet, income statement, and cash flow analysis videos.
That's the plan!
Great video! Was hoping cpng would drop a lot lower in the market correction but excited to see how this company grows.
same!
thanks for sharing this knowledge!
Glad it was helpful!
Fantastic Video!
thank you!
Here's the video I asked about! Very useful thanks but I heard alot about a competitor called 11Street which would have been a good idea to add in your comparison I believe. And yes a discounted cashflow analysis would also be nice eventhough it works more with value stocks rather than growth stocks of new companies where not a lot of history is there to track. Well done, subscribing!
Glad I could help!
Excellent video. Very clear.
thank you!
Great video! Nice to hear from a direct user of Coupang services. A DCF analysis would be fantastic :)
will work on it!
If you could make some videos about creating finance models or sth like that on Excel would be super great!!! But great content as always and keep it up Ben!
Will do!
Where does the 2 come from in the COGS at 2:50
Hey Ben! would be great if can explain how the non listed companies are valued. I'm myself and IB Tech guy, given the tech boom tons of companies opting to list so would be great if can cover that as well
Thank you so much! I look forward to you making more of these educational videos on financial analysis. I think a lot of younger generation lack these finance knowledge both for valuing stocks and managing companies e.g. if people wanna start businesses or scale :D SUBSCRIBED!!
No problem! Will try to make more of these :)
Best analysis 👌
thank you khalid!
I’m really glad I found this channel. I’m a quant entering the market and I really love hearing from other young people coming from banks :)
thanks Esteban appreciate it!
Great content as always Ben! What's your opinion on the current economy and markets with yields increasing and expected inflation? Have you adjusted your portfolio to value stocks from growth? I appreciate your opinion and maybe you can create some content on macro conditions as well.
I hold both value and growth stocks to balance out my portfolio at the moment. However, I do plan to trim the value stocks (oil, airlines, etc.) in the future as I think there is more limited upside. For my growth stocks, I am more of a buy-and-hold investor for the long run and only trim positions if my confidence in any of the companies decrease
Great video thank you! I’d be interested in more analysis on how you chose the multiple range to invest in the end - is it something that just comes from experience covering the tech space or is there more of a method to it?
you use the multiples peers are trading at but in this case it wasn't really easy to do that since the competitor multiples were all over the place. with time though you start to get a feel for what companies should be trading at
@@rareliquid thanks for clarifying - much appreciated!
LEGEND!!
you simplified the valuation really well. Thanks Ben
Happy to help!
Yessssssssss!
Haha thanks Gilbert!
Have you ever done a DCF on a private company? Do you mind showing a tutorial for that if you’ve done so?
Please do a DCF on Coupang!
DCF model please! Loving the content
will do!
Great stuff, thanks for sharing! Curious if I subscribe the membership, can I also request to add more stocks valuations into the excel sheet over the time?
as long as they are tech companies and you aren't asking for an insane number of them then yes i can definitely do that haha
@@rareliquid awesome! Yea mostly interested in high growth tech companies which are (likely) not profitable yet :)
Now it is a very good price to coupang yes ? can they grow in the long term ? i mean south corea e commerce is nearly 90% alibaba is a better buy now still ? (i have a lot of that ) thank you for answer
Can you update coupang model?
Excellent, thanks for the education. Keep it up. Sorry, I am not signed up on your patreon coz I am a cheap skate, Not much of an Equity value to speak of ;)
aha no worries your viewership is enough!
I am interested in learning discounted cash flow.
Hey Ben! What was the intro song?
My editor makes music too so it’s a custom song not sure!
That's really good! Could you make a DCF model on Coupang as well? Thanks!
Agree
@@dng992 I second that!
letsgooo dcf!
agreed
will work on this!
Please make a discounted cashflow valuation of coupang! :)
will do! hopefully in the next 1-2 weeks
What is the fair share price @ current scenario when it is just operating on South Korea
i go over this in the latter part of the video haha
DCF pls ! Great video
coming soon~
Great job on the explanation. I’d be interested in learning the calculation and theory of DCF
Coming soon!
wow did you see coupang dropped to around your 4x multiple
lovely video: thanks from the bottom of my heart for sharing, i am kissing your eyes: peace
Suppose you have forwards revenue projections for the next three years, and you're using EV/Sales. When working out the implied EV from the sales multiple, what would you normally do to work out the market cap? Isn't it a little difficult to forecast what the debt and cash-on-hand figures would look like three years from now? Is EV/Sales still appropriate in this scenario, in your opinion?
you use today's debt and cash you don't need to project debt and cash
What’s your take on NFTs? Would love to see you talking about them in your next video!
haven't looked into them much not really covering crypto at the moment!
Hey rareliquid! I found your channel by chance and I love the content you're putting out, absolutely amazing! Wondering what you think about ZM.
thank you! i've only looked at it briefly and think it's at a pretty fair price right now given its growth rate and multiple
@@rareliquid Please make a trading comps or dcf valuation video on ZM one day! Already a subscriber here.
Where exactly can I find a correct information of number of shares for a company? Because when I looked at Yahoo Finance, Stock price × Shares Outstanding supposed to be the market cap, but it didn't add up for some companies. Thanks!
it's pretty tricky to find the true fully diluted share count. for basic shares you can find the number of shares on the cover (first page) of the latest quarterly earnings filing (go to bamsec.com for this)
for dilutive securities i would google search it but you need to use the treasury stock method and calculate a lot of things like warrants, options, convertible bonds, etc. not really worth it tbh
@@rareliquid Thanks so much for very supportive reply! I actually changed the number of shares based on the market cap and stock price, because I don’t think either of them could be wrong, but am I wrong?
What do you think of SE? Although they have a large market yet to penetrate, other competitors can emerge in coming years in the same areas, giants like Amazon or assume Coupang decided to enter those markets to increase its revenue. Secondly, SE got overvalued in this COVID period, and why wasn't this hype felt before Jan'20? COVID was a revenue driver for SE, and I din't see same growth rate in coming years. You showed the revenue multiple, but it'd be good to see the losses/earnings & P/E ratio.
UPDATE VIDEO ON COUPANG? It's been trading lower and lower and the earnings doesn't seem like it's too hot. Would also love to see a video on how to actually evaluate a company's earnings report
What metrics to look for? And for example how come sometimes companies beat Earnings estimate but still go down?
There also seems to be a trend that if a company misses earnings, it shoots down on the earning day, but rebounces the next day (market absorbed news?) and vice versa, a company beats earnings, goes up on earning day, but trades lower the next day
Would love your thoughts on this
just found your channel today and already watched like 8 of your vids hah
any way to share your spreadsheet?
available for my patreon members only sorry!
Dcf would be amazing
will work on it~
make a DCF analysis video plz
Will do!
Can i ask "Why Revenue x multiple = Enterprise value??"
because the multiple is Enterprise Value / Revenue
You are comparing apples and oranges on EV/Revenue. Most of CPNG's revenue is 1P, meaning 100% of GMV is recognized as revenue. Meanwhile, both SE, MELI are 3P players, and only recognize net revenue they take as a fee. Same goes for eBay. The only pure comp is JD in that list. If you look at EV/GMV you can probably adjust for that revenue recognition difference.
Ah makes complete sense and I should've definitely looked at how the companies were recognizing revenue! Knew it was a bit fishy that SEA and MELI's multiples were so much higher. Makes me think a 3x-5x LTM sales multiple may make more sense then for Coupang but will have to adjust all the numbers and rethink the analysis.
Anyhow, this is an important lesson / adjustment for everyone to see so thank you for catching this Victor!
To everyone: the process of trading comps I showed in the video still stands and is the main takeaway. Trading comps alone and looking at numbers / multiples alone is never enough to justify valuation and it's always important to look into a set of companies and dig through filings to understand the reasons behind all the numbers!
You are still comparing apples with oranges. SEA and MELI operate in developing countries which does not have good infrastructure for logistics. Therefore, the only viable model is 3P players. Meanwhile, SK already has a ton of 3P player exist even before Coupang such as GMarket, Auction, Ticket Monster... That model is doing fine but cannot grow bigger because SK consumer is more demanding on the service. That's why Coupang stands out because they build out the best end-to-end shopping experience. Also, don't forget that Coupang has Coupang Eat and Coupang Play which means their TAM is bigger than it looks. Food delivery in South Korea is growing big and also the 3rd biggest market in the world. Coupang invests heavily into logistics to catch the growth of both industries. And they invest in Coupang Play to keep consumers stay in their ecosystem. Coupang also has the dominant player advantage so it's different with JD. JD EV/GMV is so low because they have to fight the bigger player Alibaba which means more risks.
I still think rareliquid valuation makes sense and reasonable. Coupang has a high chance to grow bigger into multiple sections as long as they invest their capital smartly. SEA and MELI valuation actually looks more bubble to me. Their model is similar to Ebay and Ebay EV/GMV is just 4x
PS: rareliquid, can you talk about Pindoudou case? I'm so curious as to why that company was value at 200 billion with less than 10 billion revenue and 1 billion net loss.
I guess you started your first 25% buy now 😀
not yet actually as i'm aiming for the 30s! things can always change after I post my videos so that's why I always say to treat them as a part of your research and not rely on what I say
Can you provide insight on Dropbox $DBX? It has great potential for growth while maintaining consistent cash flow while accumulating new companies like DocSend and HelloSign.
will consider it thank you for the suggestion matt!
DCF!!!!!,
will do~
Coupang lookin really cheap right now at $21.20
HA HA
Please do not add moving rareliquid margin on your pictures because my eyes are just following it instead of listening , no offence.
if enough people mention this as an issue i will take it into consideration, thank you for bringing this up!