Amazon DCF Model Calculates $189.84 Intrinsic Value with -5% Safety Margin
Amazon’s intrinsic value per share is estimated at $189.84 by a two-stage DCF earnings model. The model applies a 47.3% EPS growth rate over 10 years, an 11% discount rate and a 4% terminal growth rate, resulting in a -5% margin of safety.
1. DCF Earnings Valuation
Amazon’s intrinsic value is derived from a two-stage discounted earnings model that combines a high-growth phase and a lower-growth terminal phase to arrive at a per‐share value of $189.84.
2. Growth and Discount Rate Assumptions
The growth stage assumes EPS without NRI will grow 47.3% annually for 10 years, while the terminal stage applies a 4% growth rate. A discount rate of 11% is used, based on a 5% risk-adjusted risk-free rate plus a 6% equity risk premium.
3. Free Cash Flow Model Insight
An alternative DCF calculation using trailing twelve-month free cash flow per share yields an intrinsic value of $8.12, implying a margin of safety of -2354.93%, highlighting the divergence between earnings-based and cash-flow-based valuations.