Simplistic Technical Analysis for AMZN (November 9th 2014)

Last week I had predicted that AMZN would encouter resistance at $305 or even at $310 and then head down. Turns out that the stock hit resistance at $305 and reversed.

Through the week, the stock trended down after encountering resistance at $305 and ended the week marginally below $300.

The overall trend continues downwards with lower highs and lower lows (highlight 1). Looking across at similar MACD separations (highlight item 2, 3 and 4) we can see that the stock moved upwards in each case. At highlight 2, the stock moved considerably higher since the overall trend was positive. At highlight 3, the stock moved marginally higher but predominantly sideways.

Looking at highlight 4, and overall trends, here are my amateur predictions for the coming week...

1. The stock will move marginally higher and max out at $302.50 or $308.50

2. The stock will reverse again and fall to between $290 and $295 over the period of next 2 to 3 weeks.

Lets see how this pans out..

Simplistic Technical Analysis for NFLX (November 8th 2014)

Last week, I had predicted that Netflix was going to go higher. More specifically I had predicted the following...

1. Netflix will rise to $400 by end of next week and continue to 410-415 for the week after.

2. Netflix may test $425 for the week after, but will revert to 410 or so within a 4 week period.

In hindsight these predictions did not turn out to be true for primarily two reasons.

1. As per my fundamental analysis, the stock was already trading near its intrinsic value of $390.

2. From a technical analysis, the bollinger band had contracted perhaps and the stock was touching the top.

This week again, we are again looking at the 6 month candlestick chart for Netflix on Yahoo stocks. The following indicators have been added to the chart.

1. Bollinger Bands at 20 days and 2 Standard deviation

2. 20, 50 and 200 day Simple Moving Averages

3. MACD indicator for 26, 12 and 9

4. 14 day Money Flow Index 

If we look at the charts this week, we can see that the stock has trended down after touching the top of the bollinger and has also reflected from the bottom by the end of the week (highlight 1). From a MFI perspective, the stock is not overbought as yet at 62 odd. MACD divergence (highlight 3) has marginally moved to positive territory, while MACD and signal are very much in oversold territory. Crossing the 20 day and 50 day SMA is a trigger for the stock to move higher and is liked by the bulls. So expect some upward tick if the stock crosses these thresholds.

Here are my short term amateur predictions for the week.

1. The stock will end the week at the upper Bollinger at 394. 

2. It will reverse to below 390 the week after and then get pushed to around 405-410 around three weeks from now.

These are amateur predictions so please do your own research. 

Simplistic technical analysis for Russell 2000 (November 8th 2014)

Last week I had predicted that against all expectations, the Russell may push higher before reversing itself by end of the week.

The way things actually proceeded was that the Russell moved sideways and ended the week pretty much at the same place as last week.

Again, we are looking at 6 month candlestick chart for Russell 2000 on Yahoo stocks, with the following indicators on the chart.

1. Bollinger Bands at 20 days and 2 Standard deviation
2. 20, 50 and 200 day Simple Moving Averages
3. MACD indicator for 26, 12 and 9
4. 14 day Money Flow Index

Looking at the above, we can see that the Bollinger band has broadened, giving the stock room to grow (highlight 1). The MFI has moved sideways from last week indicating that a downward movement is likely but not guaranteed (highlight 2). However, the MACD divergence has sloped down indicating that downward pressure has reduced. Given indicators 1 and 3, it seems these are bullish indicators hinting that the index still has room to move higher.

I would also like to include the following chart... XLE (Energy index), XLP (Consumer Staples) and XLY (Consumer Discretionary). We can see that XLY is quite correlated to the Russell. The Discretionary spending outlook is weak indicating that Russell will continue its long term down ward trend eventually.

Based on the above, my amateur predictions are as follows:

1. The index will move higher by 10 or 15 points in the coming week (1185-1190) , before starting to fall.

2. By end of second week, the index would again fall marginally below 1180.

Please do your own research before making any financial decisions.

Simplistic Technical Analysis for FB (November 2nd 2014)

Like most stocks that announced earnings this quarter, FB too fell from where analysts expected it to be.

Unlike other stocks, its short term technical indicators, indicate an imminent reversal that could start as soon as early next week. If that happens the stock could fall to almost 70 by end of next week.

Lets see how it turns out.

Simplistic Technical Analysis for AMZN (November 2nd 2014)

Like many other technology companies, Amazon's earnings disappointed a lot of analysts who were expecting a rosier outcome.

The stock that fell after hours the earnings report, has been trying to recover much of last week.

In the last week, the stock has trended up and is showing signs of a continued momentum in the coming week. Both MACD indicator as well as MFI are indicating low to severe under bought territory indicating that stock will trend higher.

My estimate is that stock will encounter resistance at 305.50 (closing price on Friday) or even at 310-315 before trending down.

Simplistic technical analysis for NFLX (November 2nd 2014)

Last week saw NFLX climb back above $390 to at around $392.77 by the end of the week. In my previous post last week, I had mentioned that trends seem to indicate that Netflix was going to cross 390 at head towards 400 in 2 to 3 weeks.

That turned out to be true. Let us examine this week, what the trends seem to indicate.

To conduct my analysis, I am using the following indicators. We are looking at 6 month candlestick chart for Netflix on Yahoo stocks. I have added the following indicators to the chart.

1. Bollinger Bands at 20 days and 2 Standard deviation
2. 20, 50 and 200 day Simple Moving Averages
3. MACD indicator for 26, 12 and 9

I have also added a fourth indicator

4. 14 day Money Flow Index 

Based on last week, it is clear that $380 was a support level that needed to be tested. Once the stock tested that level on Thursday, it moved up. The growth trajectory seems similar to the rise in beginning of August that was a 3 week trend. Assuming a similar trend started October 16th when the stock bounced back from a poor earnings call, we can see that we are mid way of that trend. This implies by second week of November, we may be testing $415 or so.

Even looking at oversold, overbought indicators, MACD and MFI, we can see that stock still has room to grow from here. This may be tested at $400 and $410 levels for some profit taking since the valuation outlook has not changed substantially. My valuation of intrinsic value remains at $390 for Netflix.


Here are my short term amateur predictions

1. Netflix will rise to $400 by end of next week and continue to 410-415 for the week after.

2. Netflix may test $425 for the week after, but will revert to 410 or so within a 4 week period.

These are the predictions of an amateur so please make your own decisions based on individual analysis or professional advice.

Simplistic technical analysis for Russell 2000 (November 2nd 2014)

In my last week's post I had speculated that Russell 2000 would touch 1160 and then a reversal would take place. However, this week, against all expectations Russell continued to move higher beyond 1160 and closed beyond 1173.

Lets see if we can assess the next moves for the index for the coming week.

I am using the following indicators

We are looking at 6 month candlestick chart for Russell 2000 on Yahoo stocks. I have added the following indicators to the chart.

1. Bollinger Bands at 20 days and 2 Standard deviation
2. 20, 50 and 200 day Simple Moving Averages
3. MACD indicator for 26, 12 and 9

I have also added a fourth indicator

4. 14 day Money Flow Index

Last week, the Russell had ended the week at 1118.82 and 1160 seemed far away. In one week the index climbed more than $55 to end at $1173.51. There was also a Breakaway gap on October 30th where the stock went from a previous day close of $1155 to next day open of $1169 (see item 6 on chart above), indicating some market news that raised market expectations. Whether it was the Feds announcement or Japanese announcing their own quantitative easing, or a combination is difficult to tell.

Looking at the MACD indicator, it has already touched 10.35 (item 1 in chart above). I was expecting a reversal above 7.35 indicated in my last week's post. The market is in overbought territory but is not done. So where do we go from here?

If we look at Money Flow Indicator (MFI), which is a lead indicator that combines 14 day price and volume movements, lets look back to beginning of October (item 2). It was a downward trend, but the MFI indicated an upward trend. It implied that a reversal would happen at some point. The stock fell further and then reversed.

However, if we look at current MFI (item 3), it is at 77 odd. While it supports that the stock is overbought, a value above 90 would have indicated unsustainable overbought levels. The present value does not indicate so. To me, this means that the upward trend will continue till we see a reversal or flattening out on the MFI. If we look at previous 6 month highs (item 5) we can see that MFI flattened first while price continued to rise a little bit before the trend reversed (item 7). MFI was at 72 odd when it reversed in that particular instance.

Again, coming to my amateurish predictions, I suspect the following:

1. The start of week the uptrend will continue to push index higher.

2. Russell 2K will continue to test previous highs at 1183 (item 4) and even 1208 (item 5).

3. Perhaps by end of next week we will see the beginning of the reversal.

Once again, I am learning technical analysis, so please do your own research before making any decisions.

Simplistic technical analysis for NFLX (October 26th 2014)

It's already more than 10 days since Netflix fell through the bottom after announcing its latest earnings. Last week based on fundamental analysis, I proposed an intrinsic price of $390 odd. The stock has moved rapidly towards its intrinsic price.

There is not much to analyze when looking at long term trends, and we can see that the stock is steadily rising. I had suggested in my last week's blog post that price would rise above 375 in next 4 weeks. It has already gone past that in 1 week, which implies bulls are seeing a long term potential for the stock above $400.

Also, when focused on last 10 days pricing, we can see that the stock has crossed the 4 and 6 day moving averages and is approaching the 8 day average, which I suspect it will cross the coming week.

Based on the above, my amateur predictions are that the stock will approach its intrinsic value of $390 this coming week. I do feel that for $390 price to be validated, a lot more news on the international side of the business needs to show up as positive, but purely based on momentum, we should see the price rise to around $400 to $405 in the next 2 to 3 weeks. We may see some short term profit taking at 400 as well, which seems to be the next logical resistance point.

Simplistic technical analysis for Russell 2000 (October 26th 2014)

In my previous week's post, I had suggested that the Russell 2000 Index will rise to 1160 and then fall. This past week the index did rise as suggested, but not all the way to 1160 as yet. The index reached 1120 and I think it will continue that trend till 1145-1150 by the end of the week.

In terms of technical analysis, I will use the similar set of indicators as previous week, with minor changes.

We are looking at the one year candlestick chart for Russell 2000 on Yahoo stocks. I have added the following indicators to the chart.

1. Bollinger Bands at 20 days and 2 Standard deviation
2. 20, 50 and 200 day Simple Moving Averages
3. MACD indicator for 26, 12 and 9

If we look at past week's action, the overall downward trend continued from July 2014 (shown by red arrows 1 and 2).

The daily candlestick formation indicates a pause before the stock will continue the upward trend in the near term (next 3 to 4 days). This is highlighted in the red boxes (5, 4 and 3) to compare with historical trends.

The short term reversal will start perhaps middle to end of next week, as the index touches the top of the bollinger band as well as MACD divergence histogram touches 7.3. The MACD and signal however are much below zero indicating that the price will continue higher in the short term though at perhaps a slower rate.

My amateurish predictions:

1. The index price will now rise at a slower rate (with temporary pullbacks on some days of the week)  to 1150 -1160 towards the end of the week.

2. The reversal will not start before the end of the week, by end of 2 weeks we may see the price testing new lows at 1030 or lower.

FB Valuation (October 2014)

As per the Trefis chart, the fair valuation of FB is $65.50

This assumes a diluted EPS of $1.73

Netflix Valuation (October 2014)

Netflix fell almost 27% as soon as the latest earnings were reported. It was assumed that NFLX would add to subscribers, but subscriber growth was under the expectations and so was EPS growth.

In this post, I will present my assessment of NFLX intrinsic value. Netflix's valuation is based on its growth in US and international subscribers, margins per subscription category as well as content costs for the different segments.

Trefis the online valuation team assessed NFLX valuation to be $315 prior to latest earnings release. You can see that the price is made up of $5.37B revenue and $5.15B in expenses for 2014.

1. Average fee per subscriber will rise from $7.61 (2014) to $8.78 (2021)

2. US Domestic Streaming Subscribers will rise from 39.6 million customers to 57 million in 2021

3. Average fee per subscribing international customer will rise from $$7.17 in 2014 to $ 8.31 in 2021

4. International subscribers will rise from 26.2 million to almost 100 million

5.  The other element where my assessment of Netflix's trajectory is different in terms of international contribution margin. I feel this will grow from 3% in 2014 to 42.5% which will bring it more in line with Domestic contribution margin.

6. Last element where my assessment is different from Trefis team is Technology R&D costs. I think as Netflix becomes more international, it will have opportunities to lower its Technology R&D costs by at least 0.5%.

7. Final analysis reveals a target of $390....

Ofcourse, the market is not factoring an international growth of similar proportions and it is unlikely that it will do so for a while...

Update October 26th: The stock price closed on Oct 24th at $385, which implies that the market has factored in a more rapid international market growth. We could see the stock cross its valuation of $390 in the coming week and perhaps north of $400 in first two weeks of November 2014.

Simplistic technical Analysis for NFLX (19th October 2014)

Last week when Netflix announced its earnings, it fell in a free-fall to almost $330 from $455 odd. The company had missed earnings, missed adding new subscribers at the rate it was anticipated, as well as given a lower guidance for the year.

Many long term investors jumped ship after hours, leading to a massive drop in the price. The stock wiped off all the gains it had made since April.

Looking at the 1 year chart some interesting things emerge...

1. A typical precipitous drop takes 7 to 9 weeks to recover. Stock has recovered in 7 to 9 weeks in the last year everytime it has dropped 20 to 30% .

2. There is long term support between 320 and 330.

3. There are resistance levels at 400 and 450.

Given these indicators, I suspect, we will find the stock above 375 and most likely below 400 in 4 weeks time.

Looking at the 2 year graph, we can see that the stock has not stayed below the 200 day SMA for too long.

Given that the 200 day SMA has been on a positive slope for the past 2 years, it seems unlikely that bulls will reverse their thesis for too long. In fact, bulls may see it a buying opportunity to take bigger positions, which will see the stock slowly trend upwards.

Lets see how it pans out.

Simplistic Technical Analysis for Russell 2000 (October 19th 2014)

I am fairly new at trying to do technical analysis. But in this post, I thought I will give it a shot. I am looking at the Russell 2000 to understand the direction it will take.

We are looking at the one year candlestick chart for Russell 2000 on Yahoo stocks. I have added the following indicators to the chart.

1. Bollinger Bands at 26 days and 2 Standard deviation
2. 15, 50 and 200 day Simple Moving Averages
3. MACD indicator for 26, 12 and 9

The way I see it, based on last trading day of Friday 17th October 2014 the stock is set for a short term reversal. It has bottomed out at the 52 week low, and is set for a short term reversal, but for a further fall in the medium term.

There are a few things to consider.

1. Overall we are getting lower highs and lower lows, so long term trend is down. (Red arrows in the chart).

2. The latest down turn included three consecutive days of losses, which indicates the secular trend is down as well. (Indicated by red squares on the chart)

3. This is different from indicators of a reversal where we start with morning stars and end with evening stars (indicated in green boxes). Here we start with evening stars and end with morning stars meaning, the chart is failing to break a falling resistance line.

My amateurish predictions:

1. The index will rise to 1150 or 1160 in the near term (under a week), and then reverse and fall 70 to 100 points.

2. By end of 2 weeks, the index will be at 1040 or 1060.

This is my line in the sand. Lets see how it pans out.

Blackberry unveils new strategy

In the latest earnings call, CEO John Chen, clearly articulated the long term strategy for turning Blackberry around. It was simple. In the developed markets, focus on Enterprise and Security, and in developing markets on a Consumer phone that promotes BBM.

In line with these strategic proclamations, Blackberry has out-sourced its device manufacture for developing markets to Foxconn, and the App eco-system to Amazon. This means that the brand will now go back to its roots of Enterprise and Security for its core markets.

The core capability that allows Blackberry's secure enterprise offering is its QNX Operating System. QNX Operating System is also useful for other high performance embedded applications. In the latest move, Blackberry has sold part of its R&D capabilities to Volkswagon to allow a dedicated channel for that business.

Playing on its two strengths would definitely help Blackberry focus its brand and its offerings to what matters most in these markets.

By the numbers: Facebook – April 2014

Facebook surprises again.

In my previous post on Facebook, I had updated my forecasts and value for Facebook based on the key metrics that Facebook uses based on quarterly earnings from December 2013. Last week FB announced its Q1 2014 earnings and surprised everyone. Here is the updated numbers and trends along with my forecasts.

As mentioned in my different previous posts, I have also started documenting how much growth can be attributed to FB's technology. This is an evolving aspect of my analysis and I will share as soon as ready. Meanwhile lets looking at the latest growth in FB based on Q1 2014 earnings report. 

The basis of growth

As mentioned in my previous posts, Facebook measures its business in terms of a few key metrics.

These are

1. Monthly Active Users (MAU): Users that access their account atleast once a month, on mobile or on a PC.
2. Daily Active Users (DAU): Users that access their account once a day, on mobile or on a PC.
3. Ratio of DAU/MAU: This provides a metric on engagement and ofcourse an opportunity for Facebook to earn revenue.
4. Advertising Revenue: Revenue earned by click or view only ads, similar to Google
5. Payment and Fee Revenue: Amount paid for by users for stuff like games, Facebook currency and so on.
6. Social Revenue: Money earned by Facebook through new social engagements like sending gifts and priority posts
7. Average Revenue Per User: Average money earned per user as a percentage of Monthly Active Users

Projecting the engagement

I had earlier conservatively projected the numbers for the next few quarters, and then using these quarterly projections, I had projected the revenue over the next few years. In my previous post, April 2014 values were predictions. In the latest post, these have been replaced with actual figures posted by Facebook.

In the following graphs, the blue values are actuals and pink values are projections. As you can see, I have put my estimates and actuals for the latest quarter next to each other, to highlight the difference between my estimates and up and down surprises from Facebook.

First, we start with Daily Average Users. A clear trend of number of users increasing quarter over quarter across all geographies.

Next monthly average users increasing each quarter as well, more rapidly in Asia and Rest of the World compared to Europe and US & Canada.

Next we can see the Quarterly revenue numbers

Finally, we have Average Revenue Per User

Looking at the data in tabular format

		Mar 30, 13	Jun 30, 13	Sep 30, 13	Dec 30, 13	Mar 30, 14	Mar 30, 14	Jun 30, 14	Sep 30, 14	Dec 30, 14	Mar 30, 15
US and Canada						(Est)	(Actual)
Internet Population (in millions)	MAU (in millions)	195	198	199	201	202	202	203	204	205	206
273	DAU (in millions)	139	142	144	147	149	150	152	153	154	155
Total Population (in millions)	DAU/MAU	71.28%	71.72%	72.36%	73.13%	73.75%	74.26%	75%	75%	75%	75%
347	Adv. Revenue (in millions)	$552	$721	$832	$1,068	$1,301	$1,039	$1,224.38	$1,309.06	$1,359.64	$1,387.43
	Payment+Fee (in millions)	$127	$127	$130	$138	$136	$140	$140	$141	$143	$143
	Social Revenue (in millions)	$0	$0	$0	$0	$1	$0	$1.00	$1.26	$1.58	$1.97
	Total Revenue (in millions)	$679	$848	$962	$1,206	$1,438	$1,179	$1,365	$1,452	$1,504	$1,532
	ARPU	$3.50	$4.28	$4.83	$6.00	$6.44	$5.85	$6.03	$6.42	$6.63	$6.74
Europe
Internet Population (in millions)	MAU (in millions)	269	272	276	282	286	289	295	301	307	313
518	DAU (in millions)	179	182	188	195	200	203	210	218	226	234
Total Population (in millions)	DAU/MAU	67%	67%	68.12%	69.15%	70.02%	70.24%	71%	72%	74%	75%
739	Adv. Revenue (in millions)	$367	$451	$482	$658	$802	$631	$740.30	$794.15	$831.72	$866.16
	Payment+Fee (in millions)	$56	$54	$56	$69	$63	$67	$67	$71	$75	$76
	Social Revenue (in millions)	$0	$0	$0	$0	$1	$0	$1.00	$1.27	$1.62	$2.06
	Total Revenue (in millions)	$423	$505	$538	$727	$867	$698	$809	$866	$908	$945
	ARPU	$1.57	$1.86	$1.95	$2.58	$2.80	$2.44	$2.51	$2.64	$2.71	$2.77
Asia
Internet Population (in millions)	MAU (in millions)	319	339	351	368	384	390	407	426	445	463
1034	DAU (in millions)	167	181	189	200	211	216	228	242	256	270
Total Population (in millions)	DAU/MAU	52%	53%	53.85%	54.35%	55.01%	55.38%	56%	57%	58%	58%
3922	Adv. Revenue (in millions)	$176	$225	$255	$318	$279	$333	$328	$358	$387	$403
	Payment+Fee (in millions)	$21	$22	$23	$23	$26	$21	$26	$27	$28	$29
	Social Revenue (in millions)	$0	$0	$0	$0	$1	$0	$1.00	$1.29	$1.66	$2.13
	Total Revenue (in millions)	$197	$247	$278	$341	$306	$354	$355	$386	$416	$435
	ARPU	$0.62	$0.73	$0.79	$0.93	$1.02	$0.93	$0.99	$1.09	$1.19	$1.29
Rest of the world
Internet Population (in millions)	MAU (in millions)	327	346	362	376	392	395	411	428	445	462
469	DAU (in millions)	180	195	208	216	229	233	246	260	275	289
Total Population (in millions)	DAU/MAU	55%	56%	57.46%	57.45%	58.25%	58.99%	60%	61%	62%	63%
2009	Adv. Revenue (in millions)	$150	$202	$229	$300	$252	$261	$287	$309	$333	$340
	Payment+Fee (in millions)	$9	$11	$9	$11	$11	$9	$12	$12	$12	$13
	Social Revenue (in millions)	$0	$0	$0	$0	$1	$0	$1.00	$1.29	$1.66	$2.13
	Total Revenue (in millions)	$159	$213	$238	$311	$264	$270	$299	$322	$347	$355
	ARPU	$0.49	$0.62	$0.66	$0.83	$0.93	$0.70	$0.74	$0.82	$0.87	$0.93
Worldwide
	MAU (in millions)	1100	1155	1189	1228	1265	1276	1,316	1,358	1,402	1,444
	DAU (in millions)	665	699	728	757	784.83	802	837	875	916	956
	DAU/MAU	60.45%	60.52%	61.23%	61.64%	62.04%	62.85%	64%	64%	65%	66%
	Adv. Revenue (in millions)	$1,245	$1,599	$1,798	$2,344	$2,635	$2,344	$2,580	$2,771	$2,911	$2,997
	Payment+Fee (in millions)	$213	$214	$218	$241	$236	$237	$245	$251	$258	$261
	Social Revenue (in millions)	$0	$0	$0	$0	$4	$0	$4	$5	$7	$8
	Total Revenue (in millions)	$1,458	$1,813	$2,016	$2,585	$2,875	$2,501	$2,828	$3,027	$3,176	$3,266
	ARPU	$1.33	$1.57	$1.70	$2.11	$2.27	$1.96	$2.15	$2.23	$2.27	$2.26
Total Quarterly Revenue		$1,458	$1,813	$2,016	$2,585	$2,875	$2,501	$2,828	$3,027	$3,176	$3,266

Valuation

Based on the above projections, the intrinsic value of the stock seems to be $42.76.

Here are some key assumptions

1. Terminal Value of the stock is reached in Year 6
2. Revenue increases Year over Year till Year 6 is based on individual growth rates in each geography. The MAU and DAU increase till they cap at 75% of the Total Internet users in each geography.
3. Cost of Revenue is a rolling percentage of the Revenue based on historic averages
4. Operating expense needs to cover the Tax burden from the $2.11 B tax liability that will be settled in the next 3 years. It matches historic averages after that.
5. Annual Depreciation is $500M except Year 3 when it is $1B
6. Tax rate is 30% each year except next 2 years when its 41 and 35% respectively.
7. Most importantly, the annual revenue is based on the growth in each market based on DAU, MAU and ARPU growth/ decline. .
8. Beta is 1.772 as per the latest numbers
9. Debt Financing Rate is 1.46%
10. Equity Financing Rate is 6.3%
11. Terminal Value estimates
    1. Growth becomes 2% after Year 5
    2. Alternatively, stock price stabilizes at 9.5 P/E based on Year 5 revenue.
    3. Actual Terminal value was mid point between these 2 estimates

	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
	FY 2013-2014	FY 2014-2015	FY 2015-2016	FY 2016-2017	FY 2017-2018	FY 2018-2019
Annual Revenue	$7,872,000	$11,541,670	$13,302,224	$14,382,999	$15,503,443	$16,488,416
Cost of Revenue	$1,875,000	$2,749,064	$3,168,403	$3,425,829	$3,692,703	$3,927,309
Operating Expense	$3,193,000	$3,033,350	$3,640,020	$2,793,019	$2,653,368	$2,520,700
Total Other Income/ Expenses Net	$6,000	$20,000	$20,000	$20,000	$20,000	$20,000
Total costs	$5,068,000	$5,782,414	$6,808,423	$6,218,848	$6,346,071	$6,448,009
Net Income	$2,810,000	$5,779,256	$6,513,801	$8,184,151	$9,177,372	$10,060,407
Depreciation	$1,011,000	$1,000,000	$2,000,000	$1,000,000	$1,000,000	$1,000,000
EBIT	$2,810,000	$5,779,256	$6,513,801	$8,184,151	$9,177,372	$10,060,407
EBITDA	$3,821,000	$6,779,256	$8,513,801	$9,184,151	$10,177,372	$11,060,407
Tax rate	46.00%	40.00%	30.00%	30.00%	30.00%	30.00%
EBITDA X (1 – Tax rate)	$2,063,340	$4,067,554	$5,959,661	$6,428,906	$7,124,160	$7,742,285
Capital Expenditure	$1,362,000	$2,000,000	$4,000,000	$1,000,000	$500,000	$500,000
Delta Net Working Capital	$100,000	$1,053,000	$100,000	$100,000	$100,000	$100,000
Free Cash Flow	$1,612,340	$2,014,554	$3,859,661	$6,328,906	$7,524,160	$8,142,285
Beta		1.77
Debt Financing Rate		1.46%
Equity Financing Rate		6.30%
Discount Rate		12.62%
Assumed Discount Rate		12.62%
Number of outstanding shares		2,407,000,000
EPS		2.40
FCF per Share		0.84
NPV@10.28% of FCF's Year 1 to Year 6		26,454,129
Terminal Value Estimates
Perpetual Growth at 3%		$91,613,834
Shareprice at time of Analysis		56.75
Current P/E using GAAP Diluted EPS		246.74
Current P/E using Non-GAAP Diluted EPS		157.64
Assumed PE of	20	$220,378,594
Assumed Terminal Value		$155,996,214
PV of Terminal Value		$76,457,645
Total Value		$102,911,774
Estimated Value Per Share		$42.76
Projected Earnings Per Share		$10.99

Here is how the valuation would vary based on the long term P/E ratios the market wants to give

Projected EPS	$2.40
Average Revenue Growth over next 5 years	1.22
Market P/E	48.50
Stock price	$116.45

Conclusions

The stock has an intrinsic value of $42.76 which is quite sensitive to the stock's Beta at 1.77. If the volatility comes down the stock price will most likely go up. But the growth rate sustained at 22% or higher per year may push the stock all the way to $116.50 or higher.