APPS Target Price
The reason for doing this is that the share price of APPS has been going on a strong uptrend since 31 Aug 21. It is a bit too fast too furious for my liking, for which I am getting uncomfortable with APPS being my 2nd biggest holding in my portfolio.
However, before I start, I like to define what I mean by TP. Ignore what everyone else say.
IMO, it is a subjective figure, a self-fulfilling prophecy, a figure that makes an investor feel better when we are bag-holding, and it should be as high as possible, till the point where we think this is ridiculous and you will want to sell.
With that, I will be having 2 approaches towards calculating the TP:
- Comparison against its peers using the average PS, PE, PC, EV/EBITDA ratios - The peers are IronSource (CEO once mentioned this company as a close rival), Roku (CEO talked about this company in the last 2 transcript) and The Trade Desk (The largest ad-tech other than Google and FB).
- My personal approach to PS ratio, My PS Growth Valuation Method - I believe PS ratio and sales growth rate relatively move in the same direction. But one should have assume the ratios by considering the market and the peers.
Furthermore, I will actually calculated the TP per year for the next 2 to 3 years.
- This differentiate from the normal way of doing TP. Normally when doing a DCF valuation, people used a 5 to 10 years outlook - meaning if the share price move too fast and reach a price that is based on a 5 to 10 years outlook, it definitely meant that we should sell.
- However, IMO, a 5 to 10 years timeline is too far ahead. Too many things could change. I prefer using a shorter timeline such as 2 to 3 years as we can better predict the revenue figure.
- Do note that the financial year end for APPS is as of March, but results out only in June. Thus, when I stated Mar-22, meaning the end of the financial with results out during Jun-22.
Conclusion
I am glad I did this exercise. I am definitely more comfortable holding on to this company right now. In addition, if it drops ridiculously low, I will still continue to add.
If you failed to understand what I wrote above, then the summary of TPs are as follows:
Current: US$87 to US$90
Mar-22: US$157 to US$161
Mar-23: US$150 to US$375 (Base Case to High Growth Case)
Mar-24: US$259 to US$800+ (Base Case to High Growth Case)
For full article - goes to TUBInvesting.blogspot.com Blog to read them.
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