Approach 1: Strategy Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model projects future cash flows and then discounts them back to today using a required rate of return, giving an estimate of what the business might be worth in $ right now.
For Strategy, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is a loss of $87.71 million, so the valuation leans heavily on future cash flow projections rather than recent history. Analyst inputs and extrapolations point to free cash flow of $7,304.90 million in 2028, with ten year projections extending out to 2035, all converted into today’s dollars using a discount rate.
When all projected and discounted cash flows are summed, the DCF model points to an estimated intrinsic value of about $574.27 per share. Compared with the recent share price around $179.36, the model implies the stock is 68.8% undervalued based on these assumptions and inputs.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Strategy is undervalued by 68.8%.
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