Perform 10 Cap Valuation

Let's do a 10-cap valuation of $HOOD.

(Not sure what that is? Check out our course here https://www.flankinvesting.com/learn)

Current FCF: $4.5B

Which yields:

So, if we wanted a 10% return, we'd be willing to buy $HOOD at $45B. Current market cap $105B, so we miss all of the ROI figures.

Again, 10-cap valuations are VERY hard to hit (and ignores growth), but it's never bad to have an ultra-conservative model.

When we do the inverse method (earnings yield), we get an expected ROI of 4.29%.

When I bought the stock in April (around $30B market cap), the inverse method would yield 15% ROI.

Remember, it's not what you buy, but how you buy it. I bought $HOOD when it was down in the dirt, I will not be adding to my position at this valuation, but eagerly await a downturn.