Focused Compounding Ep 412. The Many Different Ways to Guess a Business’s Future Revenue
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Oct 25, 2023 The podcast discusses the importance of estimating future revenue for a company and explores different methods and factors to consider. It analyzes Carvana's financial challenges and growth ambitions. Factors such as understanding customer decision making, recurring revenue, and thinking on a longer-term basis are also discussed.
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Near-Term Revenue Focus
- Focus on forecasting revenue for the next few years, not just the long term.
- Near-term predictions are more impactful for valuations and can reveal hidden value.
Simpler Growth Analysis
- Easier to analyze growth in industries with predictable supply/distribution expansion.
- This is simpler than predicting increases in customer spending.
Focus on Economics, Not Just Revenue
- Focus on a company's long-term economics and cash generation, not just revenue.
- Revenue growth alone doesn't guarantee investor returns; profitability and value creation are key.