End of an Era or Temporary Setback: Revisiting the FANGAM Stocks

In this session, I focus on six companies (Facebook, Amazon, Netflix, Google, Apple and Microsoft) that collectively carried the US equity market in the last decade, and remain very much in the public eye. After a brief overview of my last valuations of these companies, in September 2022, I update what has happened to these companies in the last 18 months (September 2020 - February 2022) in the market, in operating results and news stories (Facebook renames itself, Microsoft acquire Activision..) and use this information to reframe my valuation stories and to revalue these companies. Valuation is pointless if you don't act on it and I list out the actions that follow from these valuations. (Please use a browser other than Google Chrome if you want to download the attached files.)
Slides: www.stern.nyu.edu/~adamodar/p...
Blog Post: aswathdamodaran.blogspot.com/...
Valuations:
1. Facebook: www.stern.nyu.edu/~adamodar/p...
2. Amazon: www.stern.nyu.edu/~adamodar/p...
3. Netflix: www.stern.nyu.edu/~adamodar/p...
4. Google: www.stern.nyu.edu/~adamodar/p...
5. Apple: www.stern.nyu.edu/~adamodar/p...
6. Microsoft: www.stern.nyu.edu/~adamodar/p...

[@ipwnatcallofduty99]

I appreciate that you make this kind of content available free!

[@richardm5589]

Thank you, professor. I always appreciate the clear no-nonsense manner in which you analyze these companies and explain your point of view.

[@anirudhakemtur674]

Thanks a lot prof !! felt amazing to look at your fair value prices !! would love to see more of your valuation videos in future. really helpful !!

[@gAlll098]

Thank you so much for this update! Pure gold.

[@wm6549]

Thank you so much for sharing your thoughts, Professor!

[@tomaskopko7475]

Now that was amazing! Thank you professor! :)

[@petarz9029]

Another fantastic and insightful video. Thank you.

[@veitastic6866]

What a great content and presentation. Thank you so much for sharing your thoughts and ideas, Sir!

[@payal1553]

This will help me very much for my research paper! Thank You so much Professor! 😀

[@necromancer7712]

27:10 spot on! Loved it❤️

[@davidu4531]

as always great content, thank you for sharing your opinion!

[@AR-go1rs]

Dear Prof. Damodaran, as always thank you very much again

[@mwaikul]

Prof Damodaran, Slides link is broken. Thank you for a great presentation and education as always.

[@aletrevi976]

unfortunately

[@CesarDominguez_]

Beautiful video. Thank you teacher.

[@MasterLeong888]

very insightful listening to you, keep it up!

[@pigsden7971]

Great video. Watched it when it first came out and wanted to follow up on it. Thanks for amazing content.

[@c351197000]

Thank you very much, Professor!

[@MonsieurDee]

Thank you professor!

[@jesusomarmontoyahernandez9201]

You´re absolutely amazing, thanks for your lectures and your excel formats, wow, what a way to democratize this extraordinary knowledge

[@evanlouisemadrinan233]

Great content as usual professor.

[@lawrenceg7341]

Thank you professor!!

[@IndianSageFintips]

Thank you professor. Great analysis

[@ridzuanali1919]

Thank you, Prof. Take care. Be safe.

[@prasadmonty9884]

Very useful insights, thanks👌

[@SinisaStojanovic]

Thank you Professor 🙏.

[@mangalpal8921]

Great work Professor.. thanks 🙏🙏

[@hwdiswbog74]

Great talk again, thank you.

[@shawn4692]

Great video. Similar to how I think about these as well

[@alexanderinsubordinate1861]

Thank market wizard Damodaran

[@shanthakumar7805]

Nice video. Good to hear from you on Chinese company Alibaba and it’s valuation and future

[@TakeBackTheMoralOrder]

I have been loading up on FB. Thank you professor!

[@marcoae7961]

very interesting view points thank you

[@venkatakarthikp1479]

I feel proud when a Tamilian reaching great heights and respected worldwide.

[@tod36129]

thank you very much prof.

[@shav3280]

Great video Professor

[@bennykhoo99]

I enjoyed watching a short video posted on KZbinrs related to Multi-verses on FB and MSFT. Thx Prof...

[@JohnSmith-ty3ds]

Thank you professor, very quality and straight to the point presentation! Could someone send me a links for valuations behind those tables (overvalued/undervalued) from September 2020.. Many thanks!

[@alir9466]

Uncle Aswath always delivers. Love his insights.

[@lauraduperrin1841]

thank you very much!!

[@SenthilKumar-of8dg]

Super Sir great insights.

[@johnsnow_0180]

Very interesting thank you very much. It would be nice to have your views about valuations within a context of high-risk of a global conflict (Ukraine, Taiwan), especially when it seems that the risks are oddly not priced in by the markets. We also had the great depression before WWII with a strong recovery and a totally different international monetary system.

[@LucidTrading]

thanks!

[@sadanandsahasrabuddhe1946]

Ashwath is Osho Rajneesh of financial universe …. Listening to both is liberating , not just educating

[@user-gl6ut7cm9w]

Thank you! Professor! (S.Korean subscriber)

[@JeanFlorentRerolleATGoogle]

Hi Aswath. As usual, a very insightful video ! 😄Unfortunately, the link to your FANGAM slides presentation is broken. Would you mind posting the right one please ? Many thanks in advance. Best

[@AndyDLee]

Your analysis of value per share (simulation) is always awesome professor. I'm wondering what software you use to calculate that? and if there is an affordable option for it?

[@wm6549]

He uses Oracle's Crystal Ball. Years ago, he wrote a post on how to use simulations.

[@MrMe629]

You can do Monte Carlo Simulation in Excel

[@Sebastianvalen]

Excel

[@MasterXoergOwnsen]

I have a question regarding the interpretation of your IRR value. Can we interpret the IRR here as an average expected return for that company if we buy it at the current price? Yes, right?

[@yellowfish555]

may I ask for how long are the growth numbers and are these average growth numbers over that period or the initial growth that will decline over that period?

[@guillermoschneider9853]

Spot on!, thanks

[@milansheth535]

amazing analysis, only thing I don't understand is what the point of discounting at WACC is rather than ur desired rate of return?

[@usuario8245]

Thank you professor! I would love if you could evaluate the likes of Palantir and Snowflake. Thank you!

[@rindsam4028]

Dear professor, I remember watching this video last year. Do you plan to redo this year? I think it will be very useful. Thank you for the knowledge you are spreading.

[@lam_daniel]

Hi Professor, in your Facebook valuation spreadsheet section cost of capital working. where the estimated beta is using multibusiness (global). As such the model have picked up the unlevered beta in the multibusiness (global). However, the Revenue figures is input in the Multibusiness (us industry average). Am I missing something? Also, why the Netflix cost of capital is so low?

[@user-yd8wp8rz2b]

Feels good to have professional confirmation that I paid fair value (or didn't pay too much over fair value) on my holdings. Thanks, Prof.

[@user-tl5yb1jy7c]

Lol. These 'fair values' are based on today's bond rates... which are a total joke.

[@user-yd8wp8rz2b]

@@user-tl5yb1jy7cThe company's previous and future ability to make money is what I look at when buying its stock.

[@goosewithashiv1624]

@@user-tl5yb1jy7c If you read the bottom at 21:12 it says that the valuations are based upon the assumption of T bond rates rising to 3%.

[@Sebastianvalen]

@@user-tl5yb1jy7c wrong

[@user-tl5yb1jy7c]

@@Sebastianvalen Wow 3%... so aggressive. Look if inflation is 7% and you think 3% is a reasonable 'risk free return', you are a sucker. And the world is full of them. I'll be spending my money before i invest it in trash.

[@Marque734]

Interesting in that MSFT story were the take over talks for discord. That underlines the argument that they try to build a whole platform for gaming.

[@richardgui9686]

Looking for this years valuation series.

[@domenicoderosa3837]

Thank you Prof. Great presentation... I am interested only in FB because I think the Metaverse is just an hidden story to let them to create a super App as Wechat and avoid to disclose it due to huge amount of Capex spending. I just see FB EBIT 57.3B a bit strange.... Should it be 47B instead? I modeled FB using EBIT margin from 40% to 35%, almost same revenue growth and invested capital Turnover and it is cheap to not consider and I start to invest in it again as well.

[@VajgeL555555555555]

Hello, that 57,3 billion is EBIT adjusted for capitalised R&D expenses and before tax. But in his valuation spreadsheet, that EBIT is adjusted for 16,70% tax rate, which makes it 48 billion (rounded) after tax operating income. I hope this helped you.

[@Hulk-gm4jw]

Por favor aswath,realiza una actualización de las fangam al día de la fecha.Gracias!!

[@nellyfrittata8319]

Google and Microsoft are the only FAANGAM stocks I want to own. I'd be interested in Apple about 20 percent cheaper. I like Amazon but I'd rather invest in emerging market competitors BABA, SHOP, MELI, JMIA, etc.

[@hit3212]

Could not open the links to the valuation models. Could this be fixed? Thanks.

[@PabloPedrajas]

Facebook still has a monopoly in the social media market. All fashion brands need to have a powerful presence either in Facebook or Instagram. The more they sell (online) the more Facebook will benefit. The metaverse is still a promise. But facts go first, and with a PE of 15x, it is indeed undervalued. I think it will reach 300 in the short run.

[@benlamprecht6414]

Thanks Professor. Going forward, please consider adding NVidea to the group, despite having a much smaller market capitalization. An argument could also be made for adding Disney, if Netflix remains in the group

[@estring123]

nvidia? lol it has larger MC than most mega cap tech. nvidia is THE BIGGEST bubble in the history of the universe.

[@tamir8858]

Got to know throw micha stocks thank u very much.

[@konstantinassolovejus]

Would love to see same on Alibaba and Tencent.

[@ichoudhury007]

Very insightful analysis of these companies! Thank you! I own Facebook or Meta through the ups and down and added quite a bit more on market overreaction due to the bearish sentiments over looming inflation, Interest Rate hikes, impact of the IOS changes etc. I actually welcomed the name change of the parent company, even though I had hard time adjusting to Alphabet initially because Google, like Facebook is so ingrained in our mind, but starting to see new lights. On a different note, I know a whole pizza sliced into 20 pieces still a pizza, but what is your thoughts on Google split? I personally think it would bring in a lot more retail investors volume, who may also join in the Option market to earn dividend from a non-dividend paying company through covered calls etc? I see a potential upside through this. Any thoughts?

[@InsidersBuyStocks]

Dear professor, I have a doubt. From your valuations this year, China seems much more convenient both in terms of valuation, and in terms of reinvestment rates. Why you invest still in the US? Companies are to be dragged down by indexes where overvaluations reign. I really appreciate you and I think there might be a reason, thank you for the incredible support 🙏

[@scorzi10]

Do you think it’s reasonable to buy and hold a FANGMA index long term if u are not trying to time the market

[@pabloseoane1305]

Does anybody know why it is not possible to get his spreadsheets? Once in his blogs links look like not working, can it be because I´m in Europe? shouldn´t be ... thanks.

[@javaChai]

How much dip before you add AAPL?

[@gregorybattis9588]

Thanks for the update on AMZN and FB in particular. I originally thought FB changing its name was a non-event and have always thought the company had very little to offer in terms of a moat and it appears with what Apple has done I might be proven at least partially correct. I question how much a name change actually affects Facebooks potential or image since now most will just tie Facebook and Meta together. I don't currently own any of the mentioned but I am considering Google, Amazon, and Microsoft.

[@lordketa5985]

Could you please update your evaluations? Thank you

[@ATSInvest]

Thanks! Unfortnutaly I was not that smart in selling FB back then but its really to cheap now..

[@AmrishKelkar]

Link to pdf not working as of Feb 13, 2022, for me.

[@MrMe629]

I love the fact that you see Alphabet as faily valued with the very conservative estimates for their future. 8% growth and lower margins. That means to me that only one of their bets needs to pay off for them to be severely undervalued. I see the chance for this similar to an option and I am happy to pay a price for it. I am wondering why you are not mentioning KZbin or GCP as both show great promises.

[@rc-boy11]

What's the summary? Anyone? Please and thank you

[@dmo9314]

Professor Damadoran, your thesis on FB is built almost solely on the name change. The math in the spreadsheet shows the stock grossly undervalued as of today. Your exit was prescient but things have changed. Do you believe it will come back to a value such as the one represented in your spreadsheet?

[@cocomon]

Thanks. For FB, I think its the competition...tiktok etc. The thesis has changed for the worse.

[@scorzi10]

do u think there will be untapped value in the metaverse that will cause the stock to rebound?

[@darthsiddious7469]

This aged like milk. I bought FB/META at 225 after this video, but had enough sense to realize that fundamentals of individual names mean absolutely nothing when 1) Fed stops printing 2) Yield curve inverted 3) Fed becoming hawkish was the nail in the coffin. I was fortunate to get out at breakeven after averaging down a bit and a slight bounce. I shudder to think you've been constantly buying a name that is under its pandemic trough.

[@pokeboy14a]

You sold meta 5 months ago? Howd that go?

[@darthsiddious7469]

@@pokeboy14a No. The video was from 13 months ago, my comment was 5 months ago. I averaged down and luckily sold at breakeven ~206. Then it went down to 89.

[@k9healthy]

Thank you, professor. My 2 cents on FB: we can't just look at the historical numbers. Considering its fundamentals going forward--there are more headwinds than tailwinds. All other FAAMG stocks (not Netflix) have crushed earnings and therefore FB can't just blame the general market. FB once disrupted and now it's being disrupted. It kept on mentioning Apple in its most recent earnings call, but it did not acknowledge that it has not succeeded in diversifying its revenue. Tiktok is the new social media star, whether FB likes it or not.

[@swayforlife8585]

Respectfully, i think your case against FB is overly simplistic. My view is that to make sense of FB's potential, you need to see the advertising industry as one that is still evolving, and that historically, competition has always been there. You cannot take away FB's expertise overnight, and i don't think it is right to assume that FB's engineers aren't working on new, noble ways to circumvent regulation and competition to add value to their customers. There will always be a demand for advertising on social media, firms will want to be ahead of each other and have demand for new kinds of services. Also, social media will keep evolving, much like the shift from Facebook to Instagram. IMO Zuckerberg is doing the right things - the company's immediate challenge is to divert scrutiny and avoid looking like a total monopoly, and Zuckerberg delivered just that by weakening FB. Short term share price should not be the focus of a company.

[@falgunpatil2372]

Age demographics for FB and Tiktok are completely different. Tiktok will NEVER get advt revenue from baby boomers! Don't confuse teen ager silly fun platfrom w/ real business!

[@havrenne]

I wonder if he adapted the story for Amazon since the company issued weak guidance and results last month.

[@milesonme]

Anyone care to explain why he didn't capitalise leases in the META (FB) valuation yet they did have leases?

[@achillemonnet3972]

Thank you for sharing so much! For Netflix, I think you overstate the competitive pressures in terms of content spend and scale of the space. There are already many big spenders on content in the US, Netflix is the 3rd largest spender. They’ve managed to navigate this existing competition well and have studios globally where pressures aren’t as strong as in the US. The second is really just the scale of the market. Global tv & film streaming is and will be enormous. In 20 years, pay tv licenses will be like home lines, it just takes a while for the old people to die off essentially. Streaming is by far the better model, for plenty of reasons. Netflix saw this and have also accepted years ago that they would never be the only global player. They’ve managed accordingly and they recognise that there will be several big players. To me it’s inevitable Netflix is one of those

[@15509020sl]

best person everrrrrrrr

[@safetyfirst2417]

I attempted to find a post class test as usual but I couldn't;)

[@alexh.4842]

Superb as usual! A few observations/thoughts: 1. Maybe NVDIA/Tesla will enter the trillion club soon 2. FB users taking hit by TikTok also, younger generation’s new fan 3. MS’s move to buy blizzard is betting & touting on games/metaverse also, which personally I dislike, but long on their performance to come…

[@MultiXDDX]

Meta is pretty cheap indeed, not a fan of the metaverse but still a strong company with great margins. I'm happy to not be alone thinking this

[@luisc.padilla1744]

Jim Cramer on January 1st, 2022: "NETFLIX! BUY!"

[@darkshadow955]

Jim lost a crap load on that stupid coin investment.

[@fleischwolf82]

I asked some teens at school which apps they use. None use Facebook and TikTok is way more popular then Insta. That is very worrying. Facebook is lacking strategy. They should have gone into fintech (not crypto that upsets regulators but payment, insurance, investing), gaming (they do have the capabilities, distribution channels) and commerce.

[@TheAcharyaa]

Teens don’t spend. Their parents do - and they’ll be on fb and Instagram and WhatsApp for the foreseeable future.

[@ADSudhanshu]

I fail to understand how Netflix still belongs to this elite group of businesses. It’s a one trick pony, albeit the best at that trick, but the other players are soon catching up. Some of the other companies that have recently ramped up investments in streaming have better cash flow (over all, not specifically from streaming), and benefit from the scale of having other products/ businesses in their portfolio.

[@maxjames00077]

Bro we cant see the fb valuation

[@maxjames00077]

Nevermind its in the description

[@r0cketman325]

Professor, thank you for your generosity in sharing your numbers and narratives in valuing these companies. Just a few other thoughts I had when valuing FB after the recent earnings. 1. 23% YoY increase in headcount. I think one of the most attractive features of software companies is the high ROE, and margins. I think their offerings are fairly saturated, so there is no clear path to driving further revenues with this additional cost. It's likely this is investment towards the metaverse. 2. On that same note, FB is planning to increase 2022 CapEx by another $10-15bn, again likely towards building the metaverse. FB seems bent on spending almost 50% of their Net Income (Assumed further increase in headcount and CapEx) to develop the metaverse platform, with no clear plans on what form it would take, and how to monetize it. And with FB's dual class share structure outside investors have no say in what FB chooses to do. With the expectation of a $10bn hit to earnings due to Apple's privacy policy changes, my concern is that Fb might be sandwiched between slowing revenue growth (best case scenario) and exploding CapEx with no clear path for the CapEx to generate revenue.

[@adama1898]

To address your 2nd point. David Wehner (CFO) highlighted that Meta capex would be going into family of apps ( data server, etc) not into much of the metaverse.

[@r0cketman325]

@@adama1898 Thanks for pointing that out! I missed that among all the hype about the metaverse.

[@yugansharora3974]

Sir please share your valuation on Peloton.

[@zinckranize]

I don't think I heard a single unique thought in this video.

[@flipper6480]

22:15

[@zetsui0411]

1635

[@InversorExperto]

FB is a value trap, Netflix has MOAT vs Disney bussines model.

[@elcapitan1601]

What do you think is their moat?

[@julianschmahl8267]

Lmao netflix has no moat at all

[@seek3n]

Shouldn't be FANGTAM?

[@Aaron-rf7ro]

The herd tend to overreact. Although Facebook is confronting more competition, it still has the largest user basis and it is a pioneer to the future. Good investment for long term investor.

[@kytv9000]

You mean a pioneer to a dystopia meta universe.

[@matts9109]

@@kytv9000 Hmmm...sounds like a moneymaker to me, bro. Like the Prof says in the video, the ESG people "don't pay my bills and don't cover my pension needs."

[@ericmanget4280]

Meh, between the lacklustre ER, Zuck telling Europe to go fuck itself, Zuck having majority shareholder power in FB, and this boring Metaverse vision that's projected to take over a decade, I'm not very optimistic about FB. Only reason I might buy at this point is due to the massive drop. If it keeps going I might do a quick trade.

[@julianschmahl8267]

@@ericmanget4280 your delusionql

[@ericmanget4280]

@@julianschmahl8267 I haven't heard one legitimate speck of interest from the public for the "Metaverse". It's just a shitty VR experience which already exists.

[@stephengopaul8090]

AMZN need a stock split to let poor people such as myself be able to buy..

[@Luciusyosef]

I believe that the crypto market has already factored in inflation. These cunning rodents are always two steps ahead of the competition because they are market creators. I'm praying I'm mistaken and they won't dump it on individual investors like they did in the past. Those that hold on to their profits the longest will reap the greatest rewards; I trade and hold profits. Keep up the excellent work! Craig Zach. has also been researching all charts, trades, and methods on BTC, which has lately helped my portfolio grow to 17 BTC.

[@austinnada3105]

great expert in the market. Knowledgeable, level headed no loss like some other traders who recently jumped on the bandwagon.

[@Luciusyosef]

@steph monik Craigzach

[@Luciusyosef]

@steph monik Craigzach ..Te le gr am ,.📧📧📧