ValuAnalysis research: Nvidia, Amazon and Tesla not in tech bubble

Free net cash flow to assets increasing over time

clock • 2 min read

Shares in the likes of Nvidia, Amazon and Tesla may "extravagantly priced" but there is a rationale behind their high market values, according to new research from London-based boutique ValuAnalysis.

The firm cited previous research on the relationship between growth and price, where the relationship flattens as growth gets higher. This suggests investors tend to discount high-growth companies compared to lower growth ones. The anti-fade model Most companies' valuations generally follow the fading return model, where it is assumed that all returns fade to the cost of capital. However, ValuAnalysis said that a growing number of disruptive companies are seeing an "anti-fade" - where the ratio of free cash flow to economic assets increases over time rather than falls. Digital...

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