
Alphabet Waymo valuation cut 40% by Morgan Stanley to $105B - ryan_j_naughton
https://www.cnbc.com/2019/09/27/waymo-valuation-cut-40percent-by-morgan-stanley-to-105-billion.html
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dmitriid
Why does this read as “mythology specialists cut valuation from an arbitrarily
high made-up number to another arbitrarily high made-up number“

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buboard
I mean, people do discuss the latest episode of game of thrones ... this is
not much different. At this point the market has gone well beyond its utility
as a tool. The overinflation with fleeing capital makes it seem more like a
spectacle.

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Jabbles
The astonishing bit of this otherwise vacuous article is that Morgan Stanley
thinks Alphabet is undervalued by ~20%:

 _In terms of Alphabet’s current value, Morgan Stanley has a price target of
$1,450_

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baybal2
I don't understand how those public company people come with such estimates.

I asked some, tried to wrap my mind around of what they sad, but I still don't
understand them.

Basically it's wildly convoluted guess based on looking what companies already
doing a similar thing is valued. In the end, it usually ends up by people
doing the this line of work calling their peers on an anonymously bought sim
card, and asking for how much they will buy it for.

I think, it is stupid

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jbob2000
How else do you find the value of something, other than to ask others what
they’d pay for it?

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tim333
Discounted cash flow models are popular. Morgan Stanley probably did one to
get the 20% undervalued number. Though they are still basically spread sheets
with a lot of numbers you have to kind of guess in them.

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marcusverus
This approach works for established companies, but breaks down when
considering services like waymo, whose value is purely a matter of potential.
Waymo is currently worth nothing (if not less) from a cash flow perspective,
but potentially worth hundreds of billions in the future, with their effective
market value lying at some (entirely subjective) point in between.

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IshKebab
> That assessment values Waymo at about $20 billion

Wait so is it $105bn or $20bn? $105bn is still an insane valuation given the
serious unsolved problems they face. $20bn seems more reasonable.

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jfoster
What's a valuation meant to be? If it is to represent the value that the
company will create for shareholders over its entire lifetime, all these
numbers seem very low for a company that is near lead position in vehicle
autonomy.

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IshKebab
A valuation is what the market (i.e. the average trader) would pay for it.
Pretty simple.

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jfoster
In this context a valuation is then impossible, though. The market does not
have access to Waymo except through Alphabet.

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hndamien
How do they get $20bn and acknowledge that Tesla will have the winners market
share (while Tesla has a market cap of $45bn and does all the other things.)

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dwoozle
Oh, the horror, this side project from Google harsly ten years old is _only_
worth $100 billion...

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xvector
Yeah, whatever. Full self driving _will_ happen. Waymo _will_ be the first to
it. And then Morgan Stanley will backtrack.

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tim333
I agree full self driving will happen. It's one of those things like computer
will beat humans at chess one day was. But as to Waymo being first that seems
a bit up in the air. They may be in the lead at the moment but there's a fair
bit to go and it only takes one competitor to come up with better algorithms.

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Grue3
>It's one of those things like computer will beat humans at chess one day was.

No, those are completely different things. The rules of chess are set in
stone. The rules of driving are based on communication - driving is an
inherently social activity. Having to cover all the weird corner case
situations that might occur on the road, fully autonomous driving is
essentially equivalent to strong AI, and no one's remotely close to that yet.

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perl4ever
It's not just that you need "strong AI" that can function in social
situations, it's that you are frequently centimeters and milliseconds from
disaster if that AI makes the wrong decision, unlike, say, a flying drone.

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jshaqaw
“Based on discounted cash flow analysis”... bwhahahaha

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dang
Hey, could you please not post unsubstantive comments to Hacker News?
Especially not shallow dismissals, as described at
[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html).

If you know more, a great thing to do is to share what you know, so the rest
of us can learn.

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jshaqaw
OK fair point. I’ll elaborate. I think that a DCF model of anything as
speculative with such a wide range of outcomes as this company is an exercise
in futility. Yes you can build such a model but it is so dependent on your
assumptions that it’s pure GIGO. Having worked a long time in finance, I am
confident that any sell side model of this company starts with the valuation
as the input and then dcf assumptions are built to arrive at that number.

