To identify the value of MAG Interactive I did a Discounted Free Cash Flow (FCF) analysis for the next 16 years. A statistical approach was used. By statistical approach I mean the following:

From the last 12 years of available FCF data one can identify the trend of the FCF change.
Next, the residual between the trend of the FCF change and the actual FCF change is used to characterize a Gaussian distribution of the residual
The trend and the Gaussian distribution thus determined can now together be used to estimate future change of FCF
Also, it is assumed that the FCF variation will reach 63% of current variation in the next 8 years and reach a steady value in the next 16 years
The past data of Federal Funds Rate is used to develop a model of the same. This model is used to generate future Federal Funds Rate (FFR). In the past the FFR has been seen to change by as much as 6.3% and hence the future FFR is also allowed to change by as much as 8%.

Once these models are developed, the simulation is done 3000 times to get the result below.

The picture (1,1) shows all possible variations (3000) of the FCF change.

Picture (1,2) shows the resulting possible (3000) future FCFs for the next 16 years.

Picture (2,1) shows the possible trajectories of the FFR

Picture (2,2) is the resulting discounted FCF

Picture (3,1) shows the histogram of the possible value per share obtained from the discounted FCF in picture (2,2)

From the histogram is picture (3,1) we can see the given the present nature of FCF variation MAGI is more likely to have a value per share of SEK 1, than any other value in the future. MAGI should thus increase its FCF, consecutively for a few years to justify the current stock price. Investors should thus hold, and not buy MAGI now.

MAGI needs to improve its Free Cash Flow.

Shared on 13 Jun 25