02-12-2015, 03:06 AM
The Street is fairly consistent with valuation techniques .
Two things will reduce the volatility
1) the dollars size of the payment . The Street will divide the cash received by the number of shares as one measure . Cash per share .
2) the street will use a discounted cash flow model when the concept is selected and size revealed . The expected cash flow will be risked using a discounted cash flow model . With a Total partner 8-10 percent should be the discount per year applied .
The cash receipt and expected cash flow discounted back to today will value the company at a higher price than today .
Today the inputs are unknown for that methodology so we have volatility .