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Netflix IPOd in March 2020 with a first-day-of-trading closing price of $26.54 and it is currently trading at $112.46. Using our DDM model, we value
Netflix IPOd in March 2020 with a first-day-of-trading closing price of $26.54 and it is currently trading at $112.46. Using our DDM model, we value Netflix at $21.54 per share, its beta is 2.13, the equity premium is 5% and the risk-free rate is 0.66%. If you expect Netflix's stock price to converge to the firms expected value in one year, what is the 1-year expected return (annualized, rounded to the nearest 0.01%)?
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