Amazon Stock Valuation: Discounted Cash Flow (DCF) Model

November 2022

Using Microsoft Excel, I built a Discounted Cash Flow Model to perform a rigorous valuation of Amazon stock, relevant to its current share price. Additionally, I wrote an accompanying report to summarize my findings and recommendation for whether investors should buy, hold, or sell the stock.

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The DCF Model includes the following:

- Measures the cash flow to shareholders as the free cash flow to equity (FCFE).

- Forecasts the FCFE for 5-10 years (pro-forma) and value the remaining cash flows using a perpetuity.

- Discounts the cash flows using the cost of equity which you will estimate using an asset pricing model (e.g., CAPM).

- Obtain the target stock price by dividing the estimated market value of equity by the total

number of shares outstanding.

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The following information is provided in the Written Report

- Recommendation, Company Information,  Industry Overview, Investment Thesis, Risks, and Valuation

Link for the DCF excel model and valuation report below.