I chose to review Amazon and think the discounted cash flow method is
the best valuation model for them. The discounted cash flow valuation
method is used to estimate the value of an investment based on its
expected future cash flows (Fernando, 2022). The present value of
expected future cash flow arrives by using a discount rate to calculate
the discounted cash flow (Fernando, 2022). Right now, the discounted
cash flow value of Amazon is $203.43 with the latest stock price at
$142.57. According to DCF, Amazon is up 42.7% (Valueinvesting,
2022). This approach works because we are considering the actual
earnings generated by the company. Also, I think a company such as
Amazon is continuously only going to rise in earnings because of
everything they offer.
References
Fernando, J. (2022). Discounted Cash Flow (DCF). Retrieved on August 4,
2022, from: https://www.investopedia.com/terms/d/dcf.asp
Valueinvesting. (2022). Amazon.com, Inc. Retrieved on August 4, 2022,
from: https://valueinvesting.io/AMZN/valuation/dcf-growth-exit-5y
