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How the dean of valuation prices loss-making tech stocks — and his views on Amazon, Netflix and Airbnb

·4 min read
How the dean of valuation prices loss-making tech stocks — and his views on Amazon, Netflix and Airbnb
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“Most of the old-time metrics we use, price-to-earnings, price to book, EV to EBITDA, were designed for mature companies,” says Aswath Damodaran, the professor of finance at New York University’s Stern School of Business who’s known as the “dean of valuation.” “To go into the mind-set that’s what the future looks like, already you have three strikes against these stocks,” he says in an interview with Mark Mahaney, head of internet research at Evercore ISI. Instead, he thinks investors need to look at revenue growth, and total addressable market; what margins they expect at a steady state; and the level of reinvestment needed for growth.