We Study Billionaires - The Investor’s Podcast Network TIP476: How to Value Companies like Alphabet, AXON and FIGS w/ Brian Feroldi
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Sep 16, 2022 Brian Feroldi, a frequent contributor and valuation expert, shares his wisdom on analyzing companies like Alphabet, Axon, and FIGS. He dives into how different metrics, like P/E ratios, are crucial depending on a company’s life stage. Brian distinguishes between real and fake competitive moats, emphasizing the need for investors to recognize genuine advantages. He reveals his valuation strategies and provides insights on the growth potential of tech giants like Google, highlighting key factors for successful long-term investments.
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Salesforce.com Oversight
- Brian Feroldi initially dismissed Salesforce.com in 2006 due to its high P/E ratio of 160.
- Since then, the stock has surged 2,250%, highlighting the limitations of P/E for hyper-growth companies.
Long-Term Drivers
- A Morgan Stanley study revealed that valuation matters most in the short term.
- Revenue growth becomes the primary driver of stock returns over a 10-year period.
Valuation Metrics by Stage
- Evaluate companies based on their lifecycle stage.
- Consider price-to-sales for early-stage companies, then price-to-gross profit, and P/E for mature companies.