Mistwell
Crusty Old Meatwad (he/him)
Based on whose expert valuation is WOTC worth less than 1 billion? You have experience in this area?
D&D General D&D Worth "23 Billion"?!?!
Zardnaar
Legend
No I said D&D may be worth less than a billion. WotC is worth more obviously due to magic.
I think the share market returns 8-10% long term, government bonds vary but say 5%.
So I woukd be aiming at 5-10% return on investments.
On a billion dollars let's say 7%. 70 million a year.
If D&D doesn't generate 70 million a year I wouldn't pay a billion for it. I understand you might ay a slight premium for something but that's not 2 or 3vbillion people are throwing around.
So my premium price I would pay would be towards the top end of my 5-10% range. Maybe a little more but not X2 or X3.
One would have to look at the books as well. BG3 65 million is a one off thing that's not a yearly income stream.
So it's basic math for me if I was investing and opportunity cost. Most likely I would personally value it in the 500'800 million range.
Depending on the state books I might go higher. The price would be how much money it makes per year, potential for growth etc. I wouldn't ay 2 billion for example probably not even a billion.
Basic math and opportunity cost would say no (exception it earns more than we know atm).. that just me the returns I would want and the opportunity cost of investing elsewhere.
20-30x profit? Where did that come from?
I’ve heard a lot of company valuation formulae over the years.
mamba
Legend
there is no right value for this as the company value always takes projected performance into account. If you want current value free of that, you are better off estimating how much money you have to invest to get the same interest as the company generates in profit. Whether anyone will sell it for that is another matter and in part depends on what they expect the future performance to be.
As a tool by itself, you can e.g. check here
Price-to-Earnings Ratio: What PE Ratio Is And How to Use It - NerdWallet
PE ratio compares a company’s stock price with its earnings per share and helps determine if the stock is fairly priced. But what is a good PE ratio?
"“In the last 20 years, for example, the S&P 500 has seen PE ratios as low as 13 and as high as 123. While that high number of 123 might make it seem like the market is extremely valued, that ratio happened in the spring of 2009 — the beginning of one of the longest bull runs in U.S. history — so an investor who sold based on the high PE ratio would have missed out on all of those gains,” Sherman said in an email interview.
“Using the PE ratio to take advantage of perceived under- or over-valuations in the market would require that the ratio always reverts to some historical average. The reality is that the PE ratio is not a great basis for investment decisions because there is simply no magic number to which the ratio tends to revert.”
I have only really seen it used for a small business where the value was explicitly calculated as Earnings * number of years of remaining lease for the location as a baseline
20 years seems a solid base for making your investment back, so 20 give or take 5 to me is a reasonable factor. Anything outside of that will have to factor in expected growth.
You said it.I’ve heard 3x revenue. Obviously share price x shares. Not heard 20 x profit before.
Zardnaar
Legend
I’ve heard 3x revenue. Obviously share price x shares. Not heard 20 x profit before.
X3 revenue would be around 500 million which was lower end of what I would conceivably pay.
It's probably 5-10 years profit.
No offence, Z, but what you would conceivably pay isn’t really of much interest to me.
Zardnaar
Legend
Bit rude imho. Your x3 number matches up with what we know their revenue is approx.
mamba
Legend
Never heard revenue as a base, that also feels like a weird metric to me. I can have 10B revenue and either have losses of 1B, barely break even or a profit of 5B.... Profit at least makes more sense than revenue, even if there is no agreed upon factor (and I'd say in large part it does not exist because the stock price can be very speculative and is not based on today's valuation but "tomorrow"'s expected valuation).
I’ve heard 3x revenue. Obviously share price x shares. Not heard 20 x profit before.
There being no right value does not mean that all values are equally reasonable, just that there is a bit of a range that makes sense. Even with the stock price being all over the place, the low end was a factor of 13, so yes, I stiil like 15 to 25 as a reasonable range (as I said a higher factor would be based on expected growth, not today's performance), certainly more than 3 * revenue
20 * earnings is really just another way to say 5% interest on my investment
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Zardnaar
Legend
Yeah it's hard to say. Ultimately it's worth whatever someone pays for it.
I used a conservative 5-10% last few years here it's been around 40-50% last 3-4 years including a downturn. Over 10% average.
Hence my opportunity cost point. Billions a nice round number for math. So is 500 million.
Easy to work out from there.
No one has the exact numbers is best part so can't prove anything either way but shouldn't be to hard to work out a lowball and high price.
