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$WISH is Worth $40 Deep Value and Huge Potential πŸš€πŸ’ŽπŸ‘

Discounted cash flow (DCF) is a valuation method used to estimate the value of an investment based on its expected future cash flows. DCF analysis attempts to figure out the value of an investment today, based on projections of how much money it will generate in the future.

Below are the data sources, inputs and calculation used to determine the intrinsic value for ContextLogic.

Valuation Model :2 Stage Free Cash Flow to Equity

Levered Free Cash Flow:Average of 11 Analyst Estimates (S&P Global)

Discount Rate (Cost of Equity) 6.9%

Perpetual Growth Rate 5-Year Average of US Long-Term Govt Bond Rate 2.0%

An important part of a discounted cash flow is the discount rate, below we explain how it has been.

Calculation of Discount Rate/ Cost of Equity for NasdaqGS:WISH

Risk-Free Rate (5-Year Average of US Long-Term Govt Bond Rate) 2.0%

Equity Risk Premium (S&P Global) 4.7%

Online Retail Unlevered Beta (Simply Wall St/ S&P Global) 1.05

Re-levered Beta = 0.33 + [(0.66 * Unlevered beta) * (1 + (1 – tax rate) (Debt/Market Equity))]= 0.33 + [(0.66 * 1.049) * (1 + (1 – 21.0%) (0.70%))] 1.037

Levered Beta Levered Beta limited to 0.8 to 2.0 (practical range for a stable firm) 1.037

Discount Rate/ Cost of Equity = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
= 1.99% + (1.037 * 4.72%)

Discounted Cash Flow Calculation for NasdaqGS:WISH using 2 Stage Free Cash Flow to Equity

The calculations below outline how an intrinsic value for ContextLogic is arrived at by discounting future cash flows to their present value using the 2 stage method. We use analyst’s estimates of cash flows going forward 10 years for the 1st stage, the 2nd stage assumes the company grows at a stable rate into perpetuity.

Levered FCF (USD, Millions) Source Present Value
Discounted (@ 6.88%)
2022 65.1 Analyst x5 60.91
2023 323.73 Analyst x4 283.37
2024 562.97 Analyst x3 461.04
2025 820.83 Analyst x3 628.93
2026 1,022.86 Est @ 24.61% 733.25
2027 1,205.2 Est @ 17.83% 808.31
2028 1,362.78 Est @ 13.08% 855.13
2029 1,495.65 Est @ 9.75% 878.05
2030 1,606.65 Est @ 7.42% 882.47
2031 1,699.71 Est @ 5.79% 873.45

Present value of next 10 years cash flows $6,464

Terminal Value FCF2031 Γ— (1 + g) Γ· (Discount Rate – g)
= $1,699.708 x (1 + 1.99%) Γ· (6.88% – 1.99% ) $35,419.89

Present Value of Terminal Value = Terminal Value Γ· (1 + r)10
$35,420 Γ· (1 + 6.88%)10 $18,201.65
NasdaqGS:WISH Total Equity Value

Total Equity Value = Present value of next 10 years cash flows + Terminal Value
= $6,464 + $18,202 $24,665.65

Equity Value per Share
(USD) = Total value / Shares Outstanding
= $24,666 / 620 = $39.8

Value per share (USD) From above. $39.8
Discount to share price of $11
= ($39.8 – $11) / $39.8
Current discount 72.4%

[wish](https://images.simplywall.st/asset/chart/127912549-dcf-1-dark/1625809624659)

What do you think?

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29 Comments

  1. I bought a bunch at 11.50 thinking it would be 25 by now.. so a bit disappointed but doubled down on my seatbelt to ride this bitch to Saturn.

    Thank you for this post to help me stop crying into my pillow all day.

  2. Wish will take off unless current institutional investors have no clou about business and then should be fired without delay… :p ![gif](emote|free_emotes_pack|upvote)![gif](emote|free_emotes_pack|upvote)

  3. Wtf are you talking about? Comparing to $SHOP, $WISH worths at least $200. Now that f**king CFO is gone, we will ![gif](emote|free_emotes_pack|upvote)

    Kidding. Good analysis ![gif](emote|free_emotes_pack|snoo)

  4. I don’t even check the daily wish price. I know this bitch is taking my to Pluto by December. πŸ›ΈπŸ›ΈπŸ›ΈπŸ›ΈπŸ”₯πŸ”₯πŸ”₯πŸ“ˆπŸ“ˆπŸ“ˆ

  5. i am a bagholder in this company, but one thing that worries me about wish is how even after spending on so much marketing, the number of customers who purchase items from their website have been stable over the past 2 years. this either means that their customer retention is bad (due to mostly having cheap , knockoff items) or they are just not bringing in new ppl

  6. Id rather own MEIP. Year end is July 31 and Financials will be posted this month along with stage 2 of their commercial drug release. It’s gained 8 percent in last 2 days.

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