Rebuttal: DCF Analysis (1)

1
Rebuttal DCF Analysis (1)

• Forecasting DCF is a nebulous practice at best
• DCF is dependent on human inputs for future
  growth estimates and discount rates
• DCF estimates are highly sensitive to small
  variations in these inputs
• Forecasting accurately in established industries
  is difficult enough, in fast moving, emergent
  industries it is next to impossible

2
Rebuttal DCF Analysis (2)

• DCF uses traditional earnings and revenue models.
• We need more precise methodologies based on
  growth and profit potential, that take into
  account unique characteristics of the information
  economy.

3
Rebuttal Online Trading

• Argument
• Online trading is responsible for the increases
  in Internet stocks.
• Rebuttal
• All stocks are potentially subject to the
  haphazardness of online trading.

4
Rebuttal Internet Hype

• Argument
• The Internet craze is responsible for the
  increases in Internet stocks
• Rebuttal
• There are many more factors that influence the
  price of a stock than DCF is able to capture