They’ll finesse it to the nth decimal point.% is on cash flow. Brisbane Property Valuer I’ll make a confession.The Twitter valuation, % of the timethat I spent was on the cash flow, and towards the end,said, I need a discount rate.And for the discount rate, what Ieffectively used a discount rate of about %.And I didn’t think about it too much.% puts you in the th percentile of US companies.So I’m basically saying, they’re a really risky company.I could finish this a little more.But I really don’t care.This is really the small stuff.My bigger assumption is what my revenues will be,what my margins will be.
This is not where I’m going to screw up.And I always have to factor in that with a young company,there’s a chance that they would not make it.In the case of Twitter, I assume that therewas zero chance that they would not make it,because they have access to capital.It’s not that they won’t screw up.But they seem to have access to people who keep giving themmoney, even if they screw up.And that’s a nice skill to have.Those are the things that fed into my valuation of Twitter.And in the week before the IPO, the value that I put was $.And if you remember your history, it was priced at $.And on the offering day, it didn’teven open for about two hours.And when it did open, it opened at $.And I got a call from somebody saying,how do you explain the $.And I said, I don’t have to.I didn’t pay it.I’ve never felt the urge to explainwhat some other person pays.AUDIENCE What was your final valuation?ASWATH DOMODARAN $ per share?
Yeah.So I get calls saying, how do you explain Uber’s $ billion.Ask somebody who paid the $ billion.I didn’t do it.I just take Uber once in awhile.But I’m not big $ billion to my driver.So I don’t feel the urge to try to explain it.In fact, that’s one final thing I want to say.Much of what you see passing for valuation out there’sis really pricing.If you have no idea what I’m talking about,let me give you a couple of very simple tests.How many of you own a house or an apartment?What, Google doesn’t pay you enoughto buy your own apartment?Time to raise your salary, so I’ll make sure that happens.You know how this works.What do you do?You hire a realtor.The realtor shows you a house.I’m thinking of moving to La Jolla,especially after two winters like–
I’m done. winter in New York, I’m out of here.My wife is from California.I’m going back.I went to UCLA.I can’t take this anymore.So I talked to my wife.And the minute I said it, she’s checking out houses.Hey, this is a good thing.And she picks the most expensive part of Californiato look– La Jolla.This is a slum in La Jolla.It’s less than $ million.That shows it’s one of the cheapest houses probablyin La Jolla.But here’s my question.How did the realtor come
