 |
 |
 |
 |
 |
 |
 |
|
|
|
|
|
|
|
The emails for this class will be collected on this page, arranged chronologically. Since I send quite a few, you can target it on a specific month by going here:
| Date | Email content |
| 1/13/25 | Welcome back! As I checked through the roster, I noticed a lot of familiar names from corporate finance, and you know that the email deluge that awaits you.I am sure that you are finding that break is passing by way too fast, but the semester will soon be upon us and I want to welcome you to the Valuation class. One of the best things about teaching this class is that valuation is always timely (and always fun...) Just as examples: is the chance to cash in on Nvidia passed you by? How much did the Barbie Buzz add to Birkenstock’s value? Is Juan Soto really worth $765 million to the Mets or is Steve Cohen bonkers? How much is Greenland worth? You will find the answers to these and other questions on my blog:
1. Preclass work: I know that some of you are worried about the class but relax! If you can add, subtract, divide and multiply, you are pretty much home free… Seriously, all I need of you is a familiarity with basic finance, accounting and statistics. If you feel shaky, you may want to check out the online classes that I have on accounting and financing basics:
2. For this class: If you want to get a jump on the class, you can go to the class web page:
As the schedule stands right now, we will meet on Mondays and Wednesdays from 1.30 pm - 2.50 pm in KMEC 2-60, starting on January 27. I would love to see all of you in class for every session, but if you have to miss a class or two, because the classes will be recorded and available on three platforms:
When you get a chance, check it out.
3. Syllabus & Calendar: The syllabus for the class is available on the website for the class and is also linked here:
and there is a google calendar for the class that you can get to by clicking on
For those of you already setting up your calendars, it lists when the quizzes will be held and when projects come due.
5. Lecture notes: The first set of lecture notes for the class is ready. You can either print off the slides, or save them online. .
Please download and print only this packet on discounted cashflow valuation. The other two packets (yes, there are three…) will be ready soon.
6. Books for the class: First things first. You don’t need a book to get through the class, and if you are budget-constrained, don’t buy any book. If you decide to buy a book, the best book for the class is the Investment Valuation book - and the fourth edition just came out. To be honest, the book is obscenely over priced, and if you can find a cheaper third edition, it will do. You can get it at Amazon or wait and get it at the book store... If you are the law-abiding type, you can buy "Damodaran on Valuation" - make sure that you are getting the second edition. Or, as a third choice, you can try The Dark Side of Valuation, again the second edition, if you are interested in hard to value companies.. Or if you are budget and time constrained, try "The Little Book of Valuation". Finally, if you really want to take a leap, try my newest book, Narrative and Numbers at
You can get away without any of these books, since much of what is in these books is in the public domain. You will find the webpages for all of the books at http://www.stern.nyu.edu/~adamodar/New_Home_Page/public.htm. If you want a comparison of the books, try this link: http://people.stern.nyu.edu/adamodar/New_Home_Page/valbookcomp.html
7. Valuation apps: One final note. I worked with Anant Sundaram (at Dartmouth) isn developing a valuation app for the iPad or iPhone that you can download on the iTunes store: http://itunes.apple.com/us/app/uvalue/id440046276?mt=8
It comes with a money back guarantee... Sorry, no Android version yet…
I am looking forward to seeing you in two weeks in class.
|
| 1/20/25 | It’s been a week since my last email, and while not a whole lot has happened, I thought I should check in ahead of next week’s class. First, if this is the first email you are reading, then you should catch up with the earlier one, which are available at the link below:
If you are wondering about the logistics (exams, projects etc.), we will start the first class with the syllabus, which will also lay out the themes for the class:
As you go through the syllabus, you will notice mention of a project and you can find the details of that project here:
Once we are through the syllabus in session 1, we will turn to an introductory packet (of about 20 pages). The link to that package is below:
Please have this ready for the first session. The rest of the class will be covered in the lecture note packets, and I sent you the link to the first one last week (but here it is again):
Having drowned you with all of that stuff, let me hit with you some pre-class reading (and I don’t think it is too painful). I don’t do much academic research and am supremely uninterested in writing for an echo chamber. Much of what I have written that is original or different has be initially (at least) on my blog. I spend the first few weeks of each year, talking about the data that I update on my website:
The first two updates re on my blog. Please browse through them, because they are relevant for class:
The first class will be a week from today (Monday, January 27, from 1.30 pm - 2.50 pm, NY time) in KMEC 2-60, and I cannot tell how happy I am to be teaching in a room other than Paulson. Please do come, if you can. If you are unable to, either because of logistical or health reasons, the class will be carried on Zoom. The Zoom link for all of the classes (all 28 sessions) is below:
Join Zoom Meeting: https://nyu.zoom.us/j/92632007432 |
| 1/26/25 | It’s been about a week since my last email, and while not a whole lot has happened, I thought I should check in ahead of the first session of the class tomorrow. First, if this is the first email you are reading, then you should catch up with the earlier one, which are available at the link below:
If you are wondering about the logistics (exams, projects etc.), we will start the first class with the syllabus, which will also lay out the themes for the class:
As you go through the syllabus, you will notice mention of a project and you can find the details of that project here:
Once we are through the syllabus in session 1, we will turn to an introductory packet (of about 20 pages). The link to that package is below:
Please have this ready for the first session. The rest of the class will be covered in the lecture note packets, and I sent you the link to the first one last week (but here it is again):
Having drowned you with all of that stuff, let me hit with you some pre-class reading (and I don’t think it is too painful). I don’t do much academic research and am supremely uninterested in writing for an echo chamber. Much of what I have written that is original or different has be initially (at least) on my blog. I spend the first few weeks of each year, talking about the data that I update on my website:
The first thee updates re on my blog. Please browse through them, because they are relevant for class:
The first class will be tomorrow (Monday, January 27), from 1.30 pm - 2.50 pm, NY time) in KMEC 2-60. Please do come, if you can. If you are unable to, either because of logistical or health reasons, the class will be carried on Zoom.
Join Zoom Meeting: https://nyu.zoom.us/j/92632007432 |
| 1/27/25 | We are officially rolling. If you enrolled in the class in the last couple of days, you did miss the first two emails but they are already in the email chronicle, in case you are interested:
Email chronicles: http://www.stern.nyu.edu/~adamodar/New_Home_Page/eqemail.html
This chronicle will be updated at the end of each week to include all emails sent up until then. If you were able to make it today’s class, thank you, and the slides that we used for the class should be at the links below:
Introduction to Valuation (Slides for Wednesday’s class): https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/ValIntroSpr25.pdf
I mentioned the project for the class, but only in very general terms. You can find the specifics at the link below:
A quick note about today's class. During the session, I told you that that this was a class about valuation in all of its many forms – different approaches (intrinsic, relative & contingent claim), different forums (for acquisitions, value enhancement, investing) and across different types of businesses (private & public, small and large, developed & emerging market). After spending some time laying out the script for the class (quizzes, exams, weekly tortures), I suggested that you start thinking about forming a group and picking companies. To get the process rolling, here is what I have done
1. Group: Please do find a group to nurture your valuation creativity, and a company to value soon. If you are ostracized, or feel alone, I will create an orphan list and make sure that you are adopted.
2. Company Choice: Once you pick a company, collect information on the company. I would start off on the company's own website and download the annual report for the most recent year (probably 2019) and then visit the SEC website (http://www.sec.gov) (for US listings) and download 10Q filings. (You can pick any publicly traded company anywhere in the world to value. The non-US company that you value can have ADRs (but does not have to have ADRs) listed in the US but you still have to value it in the local currency and local market. You can even analyze a private company, if you can take responsibility for collecting the information.)
3. Webcast of today’s class: The web casts for the first class are up and running in all of their variations (Zoom recording, downloadable video, downloadable audio and YouTube). You can access them by going to: 4. Lecture Note Packets: Please download the first lecture note packet, when you get a chance. You can either download it as a powerpoint file (though powerpoint bloats file size or as a pdf file)
Powerpoint slides: ://pages.stern.nyu.edu/~adamodar/pptfiles/val3E/valpacket1spr25.pptx (This is a big file, and to add to its pain, Microsoft PC powerpoint does not play well with Microsoft Mac powerpoint. So, you may get scary looking messages such as the file needs to be repaired and updated. Just say yes to both. It seems to be unscathed)
5. Post class test: To review what we did in class today, I prepared a very simple post-class test. I have attached it, with the solution. Give it your best shot.
Sorry (not really, but I think you are supposed to act sorry when you send long emails) about the length of this email, but there will be more to come (I promise!).
|
| 1/28/25 | It is time for the valuation of the week, and I had initially planned on making it Nvidia. But after an eventful weekend, I will have to revisit my story and valuation for Nvidia, and I promise it is coming in a future week, sooner rather than later. Instead, I am going to do a valuation that may allow you to answer the question I asked most in market interviews: Is the market in a bubble? Is it overvalued? Given there is so froth in this response, I value the S&P 500 index at regular intervals, and at the start of 2025, after two very strong years for US equities, I valued the S&P 500 index and wrote about in my second data update post for 2025:
I am not going to claim that it is scintillating reading, but I don’t think it is that boring, and I would like you to start with that. In the post, I also share the spreadsheet that contains my valuation:
Please download that spreadsheet, and here is what I would like you to do. In the spreadsheet, there are four levers that drive the index value:
If your response is that you really don’t have a point of view, leave the number as is. When you are done, go to this Google shared spreadsheet, and enter your numbers.
https://docs.google.com/spreadsheets/d/1ICGB1xcqQHYsiltPq7c2MNbRkuoJlpadpWoaVWdJoiE/edit?usp=sharing
The last column of the spreadsheet will compute how under or over valued you find the market, and the table to the right will give you the crowd judgment. Clearly, with 500 people in the two valuation classes (undergraduate and MBA), that willl be a big crowd, if you chose to partake, but I have also made this spreadsheet open to the public, and the tribe may multiply. It should take just a few minutes of your time, and I think it will be worth it. |
| 1/29/25 | Today's class started with a test on whether you can detect the direction bias will take, based on who or why a valuation is done. The solutions are posted online on the webcast page for the class. Bringing in the effects of uncertainty and complexity, I argued that these three (bias, uncertainty and complexity) forces are the biggest challenges to good valuation. In fact, they represent the Bermuda Triangle of Valuation, a place where good sense goes to disappear. If you have the time to watch a much, much longer version of this topic, try this:
We then moved on to talk about the three basic approaches to valuation: discounted cash flow valuation, where you estimate the intrinsic value of an asset, relative valuation, where you value an asset based on the pricing of similar assets and option pricing valuation, where you apply option pricing to value businesses. With each approach, we talked about the types of assets that are best priced with that approach and what you need to bring as an analyst/investor to the table. For instance, in our discussion of DCF valuation and how to make it work for you, I suggested that there were two requirements: a long time horizon and the capacity to act as the catalyst for market correction. We will be starting on the first lecture note packet on Monday. So, please have it downloaded and ready to go. |
| 1/30/25 | Each week, I will use the Thursday email to prod, nag and bug you about the project. So, without further ado, here is where you should be this first week:
In doing all of this, you will need data and Stern subscribes to one of the two industry standards: S&P Capital IQ (the other is Factset). As MBAs, you should have access to Capital IQ on the Stern Dashboard, but you need to ask for access, I have attached a pdf file that shows you how.
This is the seventh or eighth email for the class. If you have not been receiving these emails (which means that you are reading this in the chronicles), it is worth noting that I don’t keep an email list for the class. I use the Google groups that Stern creates. In theory, students registered for the class should be on Albert (the NYU official registration/grading site), Brightspace and Google Groups, and the three should be synced, but this is a university. What should be true in theory is not always the case in practice. I can do very little to alter the Google groups. If you are finding yourself locked out of the email list, start with IT, and if they won’t help, I will figure out a way to add you in. If you are a non-Stern student, and have an email address that does not end in@stern.nyu.edu, note that you were assigned a stern email address when you joined this class, and you should be able to find that address. Here is what I got from IT when I asked:
Since you are teaching a Stern course, all your students, exchange and non-Stern, are provided with a Stern account and Gmail.
You can have them all head over to 'start.stern.nyu.edu' to activate their account.
Attachment: Capital IQ Access |
| 1/31/25 | I described valuation as a craft, where just when you think you have got things nailed down, the market throws you a surprise. This week’s big story has been DeepSeek, and while its initial impact has been on market prices, the bigger question is how it will change not just the AI business, but other businesses that interact with it. With the caveat (and I mentioned this to my corporate finance class as well) that I know far less about computed chips than I do potato chips, I decided to put down my novice thoughts about how I see DeepSeek playing out in markets. What started as a short note expanded on my flight from New York to San Diego into a longer note (the nice thing about writing in planes is that you have no distractions, and UnitedWiFi is so crappy that paying money for it is a waste). The post just went up a few minutes ago, typos and all (I would love to claim that I leave the typos in to show that it was not written by my bot)
As I said, I don’t have the answers, but this is my take, and I would love to hear yours. (The post includes an advance look at your valuation of the week, which will be Nvidia)
A few quick notes. The first is that I did put up an in a tools webcast today. It is a very basic webcast on how to read a 10K, using P&G as my example. The links are below:
Downloadable video: http://www.stern.nyu.edu/~adamodar/podcasts/Webcasts/Reading10Knew.mp4
P&G Valuation (excel spreadsheet): http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/PG/P&Gvaluationfixed.xls
It is a very old webcast,and I need to do a newer version, but I am way too lazy.
Second, for those of you who have already valued the S&P 500 (the first valuation of the week), thank you! For those of you who have been putting it off, there is still time to add your input to the crowd:
https://docs.google.com/spreadsheets/d/1ICGB1xcqQHYsiltPq7c2MNbRkuoJlpadpWoaVWdJoiE/edit?usp=sharing
If you scroll to the right, and towards the top, you will see the average and median values that the crowd has estimated. When you value a company or a market index, it is good to disagree with other people’s stories, as long as you are willing to replace them with your own. My Tesla post in January 2023 evoked a lot of responses and I wrote a post about disagreements that make sense and disagreements that violate first principles:
For those of you who are late to this party, we have run out of beer and chips, but you can read all of the emails that I have sent so far in the class:
Finally, I know that some of you are having trouble finding groups for the project work, there does seem to be a critical mass (four people) on the groupless sheet (https://docs.google.com/spreadsheets/d/1ilonvo5nKx8MFLpRw_PuwFdzGzrr-S5jvldVMkUAz4Q/edit?usp=sharing) Why not create a group of your own?
|
| 2/1/25 | Hi,
I hope that you are enjoying your first weekend back at school. I will intrude with a couple of notes.
1. Teaching Fellows/Review sessions: Just a reminder about the TAs for this class. There are two:
5. Lecture note packet 1: Finally, we will be starting with the first lecture note packet in class on Monday. Please have it with you for class. The pdf version can be found here:
Have a great weekend!
Attachment: Issue 1 (February 1) |
| 2/2/25 | No email. (I blame United's crappy wifi) |
| 2/3/25 | Today's class started with a look at a major investment banking valuation of a target company in an acquisition and why having a big name on a valuation does not always mean that a valuation follows first principles, with the first principle being consistency, where your cash flows match up to your discount rates. We began our intrinsic value discussion by talking about the weapons of mass distraction. If you want to read the blog post I have on the topic, try this link:
https://aswathdamodaran.blogspot.com/2014/03/if-it-is-strategic-growth-investment-in.html This post is dated, and the India story seems to have displaced the China story, and Sustainability, AI and the Metaverse have entered the conversation. The more things change, the more they stay the same!
After setting the table for the key inputs that drive value - cash flows, growth, risk, we looked at the different ways of approaching valuation (Dividend Discount model, FCFE model, firm valuation) and the roots that they share, and how they result in different estimation processes. Next session, we will continue with a discussion of risk free rate, a foundational number that will drive the rest of our calculations. I have attached a post class test for today, with the solution. |
| 2/4/25 | In this week’s valuation of the week, I am focusing on Nvidia, a company that I have the most selfish of reasons to value, which is that I have owned shares in it since 2018, and have been a beneficiary of the AI boom. I would start with this post from 2023, just as the AI boom was taking form, where I grappled with the AI market, as seen then.
I would then move on to my 2024 post on the Nvidia valuation, where I try to value the AI story, and explain why, even though I found Nvidia to be overvalued,, after a bad earnings report:
You can follow this up with the post that I did on DeepSeek at the end of last week, where I look at how DeepSeek changes the AI story, and by extension the valuation of Nvidia:
In the context of that post, I revalued Nvidia, and my updated valuation of the company is at the link below:
Here is what I want you to focus on. There are many pieces to the Nvidia story, but I would like you to look at four of them:
1. AI chip market size: In my January 2025 valuation, I reassessed my total market size for AI chips to be $300 billion (down from $500 billion), because of how I see DeepSeek affecting the end game for AI. You are welcome to disagree, from believing that DeepSeek will devastate the AI market profitability (which will make the market for AI chips even smaller), that it will have no effect (leave the market at $500 billion) or even that it makes the market bigger (with a market size greater than $500 billion)
2. Nvidia Market Share of Chip Market: Nvidia currently has an 80% market share of the market, and over time, while competition will increase, it will remain a dominant player (with a 60% market share). You may believe that this assumption is too optimistic (giving them a share less than 60%) or too pessimistic (share >60%)
3. Nvidia’s operating margin: Nvidia has nosebleed profit margin - close to 80% gross margins and 70% operating margins. I have assumed that there are three forces that will bring margins down - increased competition, attempts by TSMC to claim a larger share o the spoils and pushback from its four biggest customers (all big tech companies), but that the target margin will stay at 60%, since it is a design company.
4. Nvidia’s cost of capital: I use Nvidia’s characteristics on risk, debt mix and operating risk to arrive at a starting cost of capital of 11.79%, which I scaled down over time to a median cost of capital for US companies, You may be more optimistic than me about operating risk, and given them the median cost of capital (close to 8.5%) today.
Change what you feel comfortable changing, using my spreadsheet, and then report your estimated value in the Google shared spreadsheet below:
https://docs.google.com/spreadsheets/d/1KgHLfJ-fkGMIA05UOQemoSAhZyD3MwhDfDQDFeQgMlY/edit?usp=sharing
That’s about it. |
| 2/5/25 | We started the class with a discussion of structuring a DCF and the different groupings of risk, and why some types of risk matter more than others, before moving on torisk free rates, exploring why risk free rates vary across currencies and what to do about really low or negative risk free rates. The blog post below captures my thoughts on negative risk free rates:
If you want to see my updated perspective on risk free rates, try my blog post from this year, built around the inflation question is here:
I know that the notion that the Fed sets interest rates runs deep, and that you will be able find ways of explaining away contrary evidence, if you feel strongly enough, but I would encourage you to keep an open mind on this question,. Way too much money and resources have been wasted because of the Fed obsession over the last decade to not fight back. Finally, I am included the latest sovereign ratings from Moody;’s and the sovereign CDS spreads
|
| 2/6/25 | By now, you should have a company picked, and if so, you can start thinking about at least the first two pieces of your discount rate calculation, a risk free rate and an equity risk premium.
Finally, if you are still groupless, reach out to me, I am putting a call out for groups that want one or two more people in the group. That’s about it for the moment. Enjoy the weekend,
Attachment: Not needed (fixed in notes) |
| 2/7/25 | It is Friday, andI have put up the webcast for risk free rates on the webpage for the class.
Risk free Rates
Webcast: https://youtu.be/imfy-O9QuVc
Additional material:
These sovereign CDS spreads and ratings are stale, and if you want updated versions, you can find them linked below (they were also attached to your Wednesday email)
Sovereign Ratings: https://pages.stern.nyu.edu/~adamodar/pc/datasets/sovrrating2025.xlsx
Sovereign CDS Spreads: https://pages.stern.nyu.edu/~adamodar/pc/datasets/sovrCDS2024.xlsx
It will of course make more sense, if you have picked a company and have a currency to work with, but that is a nag for a different days II hope that you get a chance to watch the webcast! Finally, I forgot to send you the first weekly challenge on Wednesday. It is the weekly challenge that tests you on valuation consistency, and it is entirely optional. If you choose to do it, the solution will be available online and you can check it. There is no need to submit it back to me.
Attachment: Weekly challenge #1 |
| 2/8/25 | 1. It is time for some news (not really), but this is the second newsletter for the class.
2. Company choice & groups: I was checking the valuation master sheet:
https://docs.google.com/spreadsheets/d/11M36DZLLT4NRdYI-K5wlniQA5HYn5scbxp_uWkikY9E/edit?usp=sharing
I notice that we are moving in the right direction, but it you have not picked a company, please do. If you have already and have just not entered the company name (not symbol), please do that.
3. My data update posts: I have a verbosity problem, and my data update are long and often boring (not my intent, but it happens..) I did post my sixth data update for 2025, and if you want to get a quick review of both my corporate finance and valuation classes, the posts contain that review, with update data. My sixth update is particularly relevant to what we will be talking about in the class for the next two weeks, and if you can find the time (especially if Superbowl ads are boring) to read it, it would help:
Attachment: Issue 2 (February 8) |
| 2/9/25 | I hope that you are getting ready for a Super Bowl party, but as you watch the game, you may want to think about valuation questions. For instance, how much would you pay, if you were a network, for the rights to carry the Super Bowl in perpetuity? (Think of the questions you have to address to do this valuation, starting with whether the football can outlast its CTE challenge and continuing on to whether technology will allow watchers to completely bypass ads…) And if you are a company built around subscribers, say Amazon Prime or Netflix, would you outbid the ad-driven networks because you will use the Super Bowl to sign up new subscribers? Now that I have sowed those seeds that may prevent you from watch Patrick Mahomes throw the ball with his left hand while lying on his back (how does he do that?), two quick loose ends to tie up.
Attachments: |