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Bubble waiting for a pin!

VI
VIMMSInvested
Community Contributor

Published

February 05 2025

Updated

February 05 2025

Narratives are currently in beta

The fundamental business is growing good and may continue to do so but what is bewildering is the growth in the share price which is completely detached from the fundamentals.

Even taking lofty valuation priced for perfection, the stock appears overvalued. Consider the following for 5 year projection:

  • 60% CAGR revenue growth (currently 20%)
  • 30% profit margin (currently 16%)
  • 30x Forward PE (currently 500+)

Even this lofty assumption gives a valuation of ~70. Can company deliver on these lofty parameters for next 5 years?

To reverse engineer for 10 year. To justify current price of $103,

  • 40% CAGR revenue growth for 10 years. 10 Year End revenue 83B
  • 30% profit margin for next 10 years.
  • Future PE of 30x.

Is it possible consistently for 10 years?

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Disclaimer

The user VIMMS has a position in NasdaqGS:PLTR. Simply Wall St has no position in any of the companies mentioned. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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Fair Value
US$68.3
65.0% overvalued intrinsic discount
VIMMS's Fair Value
Future estimation in
PastFuture-1b30b20182020202220242025202620282030Revenue US$30.0bEarnings US$9.0b
% p.a.
Decrease
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Current revenue growth rate
20.35%
Software revenue growth rate
0.71%