1. Brief Overview

SoFi Technologies is a US digital financial platform that has evolved from its original student-loan refinancing roots into a broader, bank-chartered financial ecosystem.

The company now combines lending, deposits, investing, payments, credit products, financial-services tools and technology-platform revenue under one consumer-facing brand. With 14.7 million members, 22.2 million products, rapid revenue growth, GAAP profitability and a growing deposit-funded balance sheet, SoFi is increasingly being valued less as a speculative fintech and more as an emerging digital bank, though its investment case still depends on whether it can scale fee-based revenue, cross-sell efficiently and manage credit, funding and regulatory-capital risks through the cycle.

And how about the current valuation? Let’s have a look!

Share

2. Discounted Cash Flow (DCF): Assumptions & Methodology

2.1 Revenue Forecast (Years 1-10)

Year 1 (2026): 30%

We anchor our 2026 forecast directly to management’s latest full-year outlook. SoFi reaffirmed full-year 2026 guidance for adjusted net revenue of approximately $4.655 billion, implying roughly 30% annual growth, alongside at least 30% member growth, adjusted EBITDA of approximately $1.6 billion, adjusted net income of approximately $825 million, and adjusted EPS of approximately $0.60. This is also consistent with SoFi’s Q1 2026 momentum when the company reported $1.087 billion of adjusted net revenue, up 41% YoY, with record members, products, and originations.

We use adjusted net revenue rather than GAAP total net revenue to keep the forecast aligned with management’s guidance and operating framework. SoFi defines adjusted net revenue as total net revenue adjusted to exclude fair-value changes in servicing rights and residual interests classified as debt due to valuation-input and assumption changes, as well as gains and losses on debt extinguishment. This measure is not a substitute for GAAP revenue, but it is the metric management uses for its outlook and core operating performance discussion. SoFi’s Q1 2026 performance was supported by 35% member growth to 14.7 million, 39% product growth to 22.2 million, record total loan originations of $12.2 billion, and continued expansion of its Financial Services segment.

Years 2-5 (2027-2030): Deceleration from 22% to 12%

In this phase, we assume SoFi remains a high-growth financial platform but begins to decelerate as the base becomes larger. Our 2027 growth assumption of 22% is broadly consistent with current consensus-style estimates, which show average 2027 revenue growth of roughly 21.5%.

Growth in this period is supported by four factors:

1. Continued member acquisition from the “everything app” strategy.

2. Cross-sell into Money, Invest, Relay, Credit Card, Crypto, At Work, and lending products.

3. Expansion of the Loan Platform Business, which shifts more originations off-balance-sheet and increases fee-based revenue.

4. Continued funding advantage from deposits, which represented more than 90% of average liabilities in Q1 and created meaningful interest-expense savings versus warehouse funding.

By 2030, our model has SoFi reaching roughly $8.6-$8.7 billion of adjusted net revenue, depending on the exact interpolation between 22% growth in 2027 and 12% growth in 2030. We believe that is not a heroic assumption relative to SoFi’s current growth profile, but it assumes a meaningful slowdown from the present 30-40% growth environment.

Years 6-10 (2031-2035): Fading to 3.5%

In the terminal phase, revenue growth fades linearly from 9.0% in 2031 to 3.5% in 2035. This assumes that SoFi has matured from a hyper-growth fintech into a scaled digital financial institution with a large member base, broader product adoption, and a more stable revenue mix.

Under this growth path, adjusted net revenue reaches approximately $11.6-$11.8 billion by 2035, with an implied 2026-2035 CAGR of roughly 10.7-10.9%, depending on the exact interpolation between forecast years. All figures are modelled in USD.

Subscribe now

2.2 Profitability (Normalised Pre-Tax Operating Profit → NOPAT)

The transition from adjusted EBITDA to normalised pre-tax operating profit is critical in our analysis. SoFi’s adjusted EBITDA margin is already high, with management guiding to approximately 34% adjusted EBITDA margin in 2026. However, adjusted EBITDA excludes costs that matter economically for valuation, including stock-based compensation, depreciation and amortisation, taxes, corporate borrowing interest, and certain fair-value or non-recurring adjustments. Because SoFi is a hybrid fintech and financial-services platform, we treat deposit, warehouse and securitisation funding costs as operating costs rather than adding them back. Our model therefore uses a normalised pre-tax operating margin to capture the true cost of running and scaling the business.

Start Normalised Pre-Tax Operating Margin: 23.5%

We model a starting normalised pre-tax operating margin of 23.5% in 2026. This sits below the guided adjusted EBITDA margin but above SoFi’s Q1 2026 pre-tax margin of roughly 18%, because management’s full-year adjusted net income guidance implies a stronger full-year profitability profile than Q1 alone. In Q1 2026, SoFi reported $166.7 million of GAAP net income, and adjusted net income was the same amount for the quarter. Against $1.087 billion of adjusted net revenue, this equalled an adjusted net income margin of roughly 15%, while full-year guidance implies approximately 18% adjusted net income margin.

We assume SoFi continues to benefit from operating leverage in technology, product development, servicing, member acquisition, and G&A. We also assume the Loan Platform Business and broader fee-based revenue mix gradually improve the quality of revenue.

Long-Run Normalised Pre-Tax Operating Margin Path: Expands to 30.0% by Year 10

The expansion to a 30.0% EBIT margin by 2035 is driven by three factors:

1.) Deposit-funded scale

The bank charter allows SoFi to fund lending with member deposits rather than relying entirely on more expensive warehouse or capital-market funding. In Q1 2026, average total deposits represented over 90% of average total liabilities, and the average rate paid on deposits was 155 basis points lower than the rate paid on warehouse facilities, which management said translated into approximately $621.8 million of annualised interest-expense savings.

2.) Fee-based revenue mix shift

Fee-based revenue reached $386.8 million in Q1 2026, with the largest components including loan platform fees, loan origination fees, technology services, interchange and brokerage. These revenue streams should require less balance-sheet capital than retained lending assets.

3.) Operating leverage

A digital financial platform should be able to scale revenue faster than fixed product, engineering, compliance, and G&A costs, although we don’t give SoFi software-company margins because it remains exposed to credit, regulation, capital requirements, and the consumer cycle.

Tax Rate: 25.0%

SoFi is now consistently profitable, with Q1 2026 marking its 10th consecutive quarter of GAAP profitability. We therefore don’t assume a long period of near-zero economic tax expense, although actual cash taxes may differ from book taxes because of deferred tax assets, stock-compensation tax benefits and jurisdictional mix. We use a transitional tax rate of 20% in 2026, 23% in 2027, and a normalised 25% from 2028 onward.

NOPAT Calculation

NOPAT = Normalised pre-tax operating profit x (1 - Tax Rate).

For SoFi, this operating profit measure is calculated after deposit, warehouse and securitisation funding costs, because as we mentioned above, those are operating costs of the lending model, and we believe this is the sound methodology.

2.3 Reinvestment & Incremental Returns

SoFi is a digital financial institution with a bank charter, a lending balance sheet, a technology platform, and a growing fee-based ecosystem. This makes reinvestment more complicated than in a normal marketplace DCF, because growth requires both technology investment and sufficient balance-sheet capital to support loans, deposits, liquidity and regulatory requirements.

Capex

We model core technology and infrastructure capex at 4.0% of revenue initially, fading to 3.2% by Year 10.

This spend reflects internal software, platform infrastructure, compliance systems, data architecture, product development, security and operational technology (and we hope we didn’t forget any other major spend :). SoFi’s balance sheet already shows property, equipment and software of $448.5 million as of Q1 2026, up from $416.4 million at year-end 2025, while the cash-flow statement shows continued purchases of property, equipment and software. This supports the view that technology and infrastructure investment remain real ongoing cash needs, even though they are not the largest source of balance-sheet reinvestment.

Balance-Sheet Capital Reinvestment

For SoFi, reinvestment isn’t mainly classical working capital. The more relevant charge is balance-sheet capital needed to support growth in loans, deposits, servicing assets, liquidity and regulated banking activities.

We model balance-sheet capital reinvestment at 16% of incremental revenue initially, fading to 8% by Year 10. This should be understood as an economic capital-retention charge, not a forecast of gross loan funding needs.

This is intentionally more conservative than for an asset-light software platform. Even with the Loan Platform Business shifting some originations off-balance-sheet, SoFi still needs capital for credit exposure, compliance, liquidity and banking infrastructure. As of Q1 2026, SoFi Bank reported a CET1 ratio of 15.3%, a total risk-based capital ratio of 15.4%, and a Tier 1 leverage ratio of 12.8%. That’s comfortably above required levels, but still relevant constraints on long-term balance-sheet growth.

Incremental Returns on Reinvested Capital

A conventional ROIC framework is less clean for SoFi because deposits, loans and funding costs are part of the operating model. However, incremental returns should improve if fee-based revenue, Loan Platform Business revenue and member monetisation grow faster than balance-sheet-heavy retained lending.

We therefore model incremental returns improving over time as SoFi shifts from capital-intensive growth toward growth driven by member scale, deposit funding and fee-based monetisation.

By Year 10, returns on incremental reinvested capital approach the high-teens to low-20s range, but again, we don’t assume software-like returns because credit exposure, liquidity requirements and regulatory capital remain structural constraints.

2.4 Free Cash Flow to the Firm (FCFF)

The formula used is:

FCFF = NOPAT + D&A - Core Capex - Balance-Sheet Capital Reinvestment

All figures below are in USD millions. NOPAT is calculated from normalised pre-tax operating profit, not from conventional industrial-company EBIT. The balance-sheet reinvestment line should be read as an economic capital-retention charge rather than classical receivables/payables working capital.

2.5 Discount Rate (WACC)

The Weighted Average Cost of Capital serves as the hurdle rate for our cash flows. We construct this using market-based inputs current as of late May 2026.

Risk-Free Rate (Rf): 4.50%

We use approximately 4.50%, broadly in line with late-May US 10-Year Treasury data.

Equity Risk Premium (ERP): 4.24%

We use Damodaran’s latest implied US equity risk premium estimate available as of late May 2026. His 1 May 2026 estimate was 4.24% based on trailing 12-month adjusted payout, using a 4.40% US Treasury rate.

Beta (β): 1.70

Raw SOFI beta screens currently show a high beta, around 2.13. We don’t use the raw figure directly because SoFi’s short public history, SPAC-era volatility, retail-trading intensity, and capital-raise overhang likely overstate the mature-business beta.

Instead, we apply a forward-looking adjusted beta of 1.70, which still treats SoFi as a high-risk, high-volatility financial growth stock.

Cost of Equity (Ke)

Ke = Rf + β x ERP

Ke = 4.50% + 1.70 x 4.24%

Ke = 11.71%

Pre-Tax Cost of Debt (Kd): 7.00%

SoFi has a higher cost of capital than mature banks or megacap platforms because it’s still a growth financial stock with credit-cycle exposure. We use 7.0% as the pre-tax cost of debt.

This should be read as the cost of corporate debt capital, not as the cost of deposits. Deposit funding costs are already reflected in SoFi’s operating economics and should not be double-counted in WACC.

Tax Shield: 25%

We use the same normalised marginal tax rate as in the NOPAT calculation. This is more consistent than using only the 21% US federal statutory rate, because the model already assumes a 25% normalised long-run tax rate.

After-Tax Cost of Debt

Kd x (1 - t) = 7.00% x (1 - 0.25) = 5.25%

Capital Structure

At the price of $15.62 (May 26, 2026), SoFi’s equity value is approximately $21.5 billion using the Q1 2026 diluted weighted-average share base of roughly 1.378 billion shares. Q1 2026 total debt was approximately $1.813 billion.

For WACC purposes, we exclude deposits from debt because deposit funding costs are already embedded in SoFi’s operating economics.

We use approximately:

92% Equity / 8% Debt

WACC Computation

WACC = (0.92 x 11.71%) + (0.08 x 5.25%)

WACC = 10.77% + 0.42%

WACC = 11.19%

In this way, our final used WACC is 11.2%.

2.6 Terminal Value

We calculate the Terminal Value using the Perpetuity Growth Method, assuming the business continues indefinitely as a going concern.

Terminal Growth Rate (g): 3.0%

This is set below long-term nominal GDP assumptions and reflects the view that SoFi, once mature, should grow broadly in line with nominal economic activity plus modest share gains from legacy banks. We don’t use a higher terminal growth rate because we believe that financial services remain competitive, regulated and cyclical.

The formula used is:

TV = FCFF(n+1) / (WACC - g)

The calculation is as follows:

FCFF(Y11) = FCFF(Y10) x (1 + g)

FCFF(Y11) = 2,587 x 1.03 = 2,665

Then:

TV = 2,665 / (0.112 - 0.030)

TV = 2,665 / 0.082

TV = $32,495 million

3. Results

We sum the present value of the explicit forecast-period cash flows and the present value of the Terminal Value to arrive at Enterprise Value.

PV of FCFF: Years 1-10

Using the 11.2% WACC discount factors:

Sum PV(FCFF) = $8,857 million

Then:

PV of Terminal Value = $11,240 million

Enterprise Value

8,857 + 11,240 = $20,098 million

Equity Value Bridge

Enterprise Value: $20,098M

(+) Cash & Cash Equivalents: $3,401M

(+) Investment Securities: $3,231M

(-) Debt: $1,813M

(-) Other / Unfunded Liabilities: $300M model assumption

Full-Liquidity Equity Value: $24,617M

Important adjustment is that we do not subtract deposits as debt. For SoFi, deposits are operating funding, similar to a bank, not ordinary corporate debt. SoFi reported $40.243 billion of deposits as of 31 March 2026.

However, we also don’t treat the entire liquidity position as excess cash in the way we would for an asset-light software company. Cash, securities and liquidity support the operating model, regulatory requirements, deposits and future loan growth. Therefore, the bridge above should be interpreted as a full-liquidity equity value, not a clean excess-cash-adjusted equity value.

Intrinsic Value per Share

Diluted shares outstanding: 1,378 million weighted-average diluted shares in Q1 2026.

Value per share:

24,617 / 1,378 = $17.9

Rounded intrinsic value: $18 per share

4. Scenarios

Bear Case: $10 per share

Inputs

WACC rises to 14.0% because the market continues to treat SoFi as a high-beta, credit-sensitive fintech rather than a maturing digital bank. Terminal growth falls to 2.0%.

Revenue growth slows materially after 2026 as loan demand weakens, credit costs rise and competition for deposits pressures funding costs. Under this scenario, adjusted net revenue reaches $8.708 billion in 2035. Normalised pre-tax operating margins cap at 24.0% rather than expanding to 30.0%.

Outcome

SoFi remains profitable, but the market values it more like a cyclical consumer lender with technology optionality rather than a premium digital financial platform.

This bear case is not a business-failure scenario but rather a scenario where SoFi keeps growing but receives limited valuation credit because investors remain concerned about credit cyclicality, funding costs, dilution and regulatory capital intensity.

Base Case: $18 per share

As modelled above: WACC of 11.2%, terminal growth of 3.0%, long-run normalised pre-tax operating margin of 30.0%, and 2035 adjusted net revenue of $11.484 billion.

Bull Case: $34 per share

Inputs

WACC compresses to 10.0% as SoFi proves that credit losses are controlled, dilution slows and fee-based revenue becomes a larger share of the mix. Terminal growth rises to 3.5%.

Revenue growth remains above 20% for longer, supported by cross-sell, SoFi Plus, Invest, digital assets, Big Business Banking, stablecoin-related infrastructure and the Loan Platform Business. Under this scenario, adjusted net revenue reaches $17.873 billion in 2035. Long-run normalised pre-tax operating margins expand to 35.0% as SoFi becomes a high-efficiency, deposit-funded digital financial platform.

Outcome

The stock re-rates from “risky fintech lender” to “scaled digital financial ecosystem.”

This bull case still doesn’t require pure software-company economics. The key difference is that SoFi earns a higher valuation because a larger share of incremental growth comes from fee-based revenue, member monetisation, platform services and capital-light financial infrastructure rather than retained lending alone.

Share

5. Conclusion: Margin of Safety & Final Verdict

Margin of Safety = 1 - (Current Price / Intrinsic Value)

Margin of Safety = 1 - ($18.22 / $18)

Margin of Safety = -1.22%

This margin of safety places the stock in exactly the farily valued category based on our defined scale. Due to high beta, the stock price can swing quite a bit - at the start of our analysis, for example, the stock price was at $16 per share, which gives MoS of 11.1%, i.e. slightly undervalued category.

In our scale, SoFi becomes undervalued below $15.3 per share (MoS = 15%) and deeply undervalued at $10.8 per share

Final verdict: Fairly Valued

… but with a fairly big variance and swings to undervalued territory can / should be expected.

SoFi is no longer just a student-loan refinancing story or SPAC-era fintech. It is now a profitable, deposit-funded digital financial platform with real scale, strong member growth, expanding fee-based revenue and a bank-charter funding advantage.

At the current price (May 29, 2026 close) of $18.22, the stock falls in basically exact farily valued category in our book. The upside remains meaningful if SoFi proves that cross-sell, fee-based revenue and operating leverage can turn it into a durable digital financial compounder, but our base case already gives the company meaningful credit for that transition.

For valuation-driven investors, the stock becomes cleaner below roughly $15.3, and substantially more attractive in the low teens unless future results justify higher margins, lower capital intensity or a lower cost of capital.

Share

Our Strategy

We’ve been observing the company on the sidelines for quite some time and like its growth. We believe it’s an interesting choice for investors with high conviction in the business that are leaning towards the bull case scenario in their conviction. We haven’t done a truly deep dive into the company as a whole for it to be a case of “wonderful company at a fair price” for us right now, but we do acknowledge that for investors that did their DD and built a strong conviction in the name, it still might be an interesting area to accumulate.

We don’t sell put options in this case as a way of possible position initiation, since the premiums are too small in the Margin of Safety area where we’d happily start a position, i.e. around $12.6 per share (MoS = 30%).

Disclosure

The author of this article does not hold a position in the security of SoFi Technologies Inc. at the time of publishing this valuation. This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security.

We would really appreciate if you find a little of your precious time to like, comment, and restack this post. Thank you!

Leave a comment

What are your thoughts on SoFi? Do you hold it? Is it a buy for you right now?

Let us know in the comments!

1. Brief Intro

Mastercard is one of the cleanest examples of a modern toll-road business. Every year, more money moves digitally, more transactions cross its rails, and the company captures a small slice of that flow at extraordinary margins.

The key question for this DCF is not whether Mastercard is a great business. It is, we all know that. The real question is whether today’s price already reflects that greatness, and how much value remains once we account for regulation, client incentives, litigation risk, cash-flow conversion and the durability of long-term payment growth. And remember, a fairly valued company doesn’t mean it’s not a buy… :)

Let’s go for it!

Share

2. Discounted Cash Flow (DCF): Assumptions & Methodology

2.1. Revenue Forecast (Years 1-10)

Year 1 (2026) Growth: 12.5%

We anchor our 2026 forecast to management’s January 2026 outlook that net revenue should grow at the high end of a low-double-digit range on a currency-neutral basis, excluding inorganic activity. That guidance came after a 2025 in which Mastercard grew net revenue 16% on a reported basis and 15% on a currency-neutral basis, with payment network revenue up 12%, value-added services and solutions up 23%, cross-border volume up 15%, and switched transactions up 10%.

We therefore use 12.5% for 2026 on a reported USD basis. This is slightly above a strict constant-currency reading of management’s low-double-digit framework, but in our view it remains defensible given the expected foreign-exchange tailwind, tougher first-half comparables, resilient volume trends entering the year, and the fact that value-added services and solutions now represents more than 40% of Mastercard’s total net revenue.

We assume continued support from 3 main drivers:

1.) Cross-border volume, including travel-related activity, remains an above-average revenue contributor relative to domestic volume.

2.) Mastercard should continue to benefit from ongoing penetration of value-added services and solutions, including security, digital authentication, consumer engagement, business insights, processing and open-finance capabilities.

3.) The company remains exposed to the secular migration from cash, cheques and legacy payment flows to electronic rails across both consumer and commercial payments.

We do, however, temper the forecast for merchant litigation, interchange and network-fee scrutiny, higher rebates and incentives on new and renewed customer deals, and a potentially softer global macro impulse versus 2025.

Years 2-5 (2027 - 2030): Deceleration from 11% to 8%

In this phase, we assume a gradual deceleration as the law of large numbers takes effect. Mastercard exited 2025 with approximately $32.8B of net revenue. By 2030, our model reaches roughly $53.0B. We assume that growth in this period is supported by continued services mix shift, cross-border normalisation at a higher base, commercial payments digitisation, and pricing power embedded in the network model.

We assume value-added services and solutions continues to outgrow the payment network and becomes an increasingly important stabiliser of group growth. However, we do not assume the exceptional 2025 growth spread persists indefinitely or that mix shift is automatically margin-accretive. In our model, the payment network remains the economic core of the business, while services should increasingly contribute to revenue durability and customer stickiness.

Years 6-10 (2031 - 2035): Fading to 3%

In this terminal phase, the growth rate steps down to 6.5% in 2031 and then fades to 5.5%, 4.5%, 3.5% and 3.0% by 2035. This reflects a maturing revenue base, reduced contribution from post-pandemic cross-border normalisation, and the reality that even high-quality compounders eventually converge towards a lower sustainable growth rate as their absolute scale increases.

The 3.0% terminal-year growth rate is a mature nominal growth assumption in this model, not a continuation of Mastercard’s explicit high-growth phase. We believe it is defensible for a global payments network with pricing power, high incremental returns, exposure to nominal payment volume growth, and a still unfinished migration from cash and cheques into electronic payments. At the same time, it avoids assuming that Mastercard can materially outrun nominal economic activity forever.

Under this growth path, the implied 2025-2035 revenue CAGR is approximately 7.3%, 2035 revenue is approximately $66.4 billion, and all figures are modelled in USD.

Share

2.2. Profitability (EBIT → NOPAT)

The transition from adjusted margins to GAAP operating income is a standard in our analyses. Mastercard reported a 57.6% GAAP operating margin in 2025, while adjusted operating margin was 59.2%. The operating-margin bridge was driven primarily by $504 million of pre-tax litigation provisions. We keep in mind that gains and losses on equity investments affect non-operating income rather than EBIT. Our model uses GAAP EBIT, not adjusted EBIT, because litigation, restructuring and share-based compensation are real economic costs to shareholders. Share-based compensation is already included in GAAP general and administrative expense, so there is no GAAP-to-adjusted add-back in our margin bridge.

Start EBIT margin: 57.4%; 57.9% underlying before the 2026 restructuring charge

Mastercard’s 2025 GAAP operating margin was 57.6%. For 2026, we model an underlying operating margin of 57.9% before the announced restructuring charge. This reflects modest operating leverage from revenue growth, cost discipline and the benefit of Mastercard’s strategic review.

However, because our DCF uses GAAP EBIT rather than adjusted EBIT, we include the roughly $200 million Q1 2026 restructuring charge announced by management. On our 2026 revenue forecast, that charge reduces reported operating margin by roughly 50 basis points, resulting in a Year 1 GAAP EBIT margin of approximately 57.4%. This avoids the inconsistent treatment of using GAAP EBIT while effectively excluding a known restructuring cost.

Long-run margin path: Expands to 60.5% by Year 10

We model GAAP EBIT margin expanding from 57.4% in 2026 to 60.5% by 2035. This expansion is driven by continued revenue scale, operating leverage, cost discipline, automation, pricing power and selective reinvestment. It is not based on a blanket assumption that value-added services and solutions is structurally higher-margin than Mastercard’s core payment network.

The core network is already a highly scalable business. Value-added services and solutions remains an important part of the margin thesis, but primarily because it improves revenue durability, customer stickiness and pricing breadth. We believe it shouldn’t be treated as automatically margin-accretive, given that services growth also carries personnel, fulfilment, marketing, consulting, data, software and acquisition-related costs.

We also treat rebates and incentives as a constraint on net revenue yield, not as an operating-expense lever. Mastercard records rebates and incentives within net revenue, and payment network revenue included $20.5B of rebates and incentives in 2025, up 16%, primarily due to growth in key drivers as well as new and renewed customer deals.

Mature global payment networks are among the highest-margin business models in large-cap financial services, so a 60.5% terminal-year GAAP EBIT margin is plausible in our view. We believe it’s a constructive but disciplined assumption, because it is above Mastercard’s 2025 GAAP margin and modestly above its 2025 adjusted operating margin, while still leaving room for litigation, regulatory pressure, client incentives, cross-border cyclicality and ongoing reinvestment in services, cyber, data and open-finance capabilities.

Tax rate: 20.5% in 2026, 21% thereafter

Mastercard’s 2025 effective tax rate was 19.4%, up from 15.6% in 2024, primarily due to Singapore operations, including the 15% global minimum tax under Pillar 2, and geographic mix, partially offset by discrete tax benefits. Management guided to a 2026 non-GAAP tax rate of 20% to 21%.

We therefore use 20.5% in 2026 and a normalised 21.0% from 2027 onwards. We see this as more appropriate than anchoring to the low end of guidance or assuming a permanently sub-20% tax rate, while still reflecting Mastercard’s globally diversified profit mix.

NOPAT calculation

NOPAT = EBIT x (1 - Normalised Operating Tax Rate)

We calculate NOPAT from EBIT, not pre-tax income, and exclude non-operating income, interest expense and equity-investment gains or losses. This keeps the DCF focused on after-tax operating profit before financing choices and avoids giving the company credit for an interest tax shield in unlevered free cash flow.

Subscribe now

2.3. Reinvestment & ROIC

Mastercard operates one of the purest asset-light toll-road models in global finance. However, “asset-light” does not mean “no reinvestment at all”. The company still reinvests through technology infrastructure, capitalised software, customer incentive assets, data and cyber capabilities, and the operating infrastructure required to support global transaction growth.

Capex

We model capex at 3.6% of revenue initially, gradually converging to 3.2% by the terminal year. This includes both purchases of property and equipment and capitalised software. The distinction matters because Mastercard’s reinvestment burden is not captured by traditional property and equipment alone.

In 2025, Mastercard spent $489 million on purchases of property and equipment and $726 million on capitalised software, for total cash investment of approximately $1.215B, or about 3.7% of net revenue. We don’t describe this entire amount as growth capex, because part of it is required to maintain the existing network, software stack and technology base.

Our assumption that capex fades from 3.6% of revenue to 3.2% over the forecast period reflects gradual scale benefits. It doesn’t assume a sharp drop in investment intensity, which we think would be too aggressive for a business that still needs to maintain global resilience, cyber capability, compliance infrastructure and product innovation.

Net Working Capital (NWC)

Mastercard’s working-capital profile is favourable, but not a permanent free source of capital. The company carries receivables, prepaid expenses and capitalised customer incentive assets, while also benefiting from accrued expenses, settlement obligations and customer incentive liabilities. These balances support cash conversion, but they are partly timing-driven and should not be overcapitalised.

Customer incentives are the key item. At year-end 2025, Mastercard had approximately $10.4B of customer incentive assets, more than offset by approximately $13.0B of customer incentive liabilities. This liability offset is economically relevant and makes it too conservative to treat customer incentive amortisation as a permanent cash drag.

We therefore model Delta NWC at 0.0% of incremental revenue. This is a neutral assumption, as it gives Mastercard credit for not needing meaningful incremental working capital to grow, without assuming recurring working-capital cash inflows.

ROIC (Return on Invested Capital)

Mastercard’s ROIC is structurally exceptional, but the exact figure depends on how invested capital is defined, especially given excess cash, treasury stock, settlement balances, customer incentive accounting, goodwill and acquired intangibles. In other words, a lot to consider and a lot of ways to look at it. We therefore don’t rely on a single headline ROIC figure as a valuation input.

Operationally, Mastercard clearly earns returns far above its cost of capital. This reflects high margins, limited physical asset intensity, strong pricing power and modest working-capital needs.

For model validation, the key question is whether reinvestment supports the forecast growth rate. Revenue grows from approximately $32.8B in 2025 to $66.4B in 2035, while capex remains modest and Delta NWC is modelled at 0.0% of incremental revenue. This implies very high incremental returns on capital.

In this way, we assume incremental ROIC remains comfortably above 25% across the forecast period, while still allowing for reinvestment in cyber, data, compliance, software, customer relationships and network resilience.

2.4. Free Cash Flow to the Firm (FCFF)

The formula used is:

FCFF = NOPAT + D&A - Capex - Delta NWC

For Mastercard, D&A is defined economically rather than narrowly. It includes reported depreciation and amortisation, as well as the amortisation of capitalised customer incentives. This is the more neutral treatment for Mastercard because customer incentive amortisation is a non-cash reduction to net revenue and operating income, while the associated balance-sheet movements are captured through working capital.

In 2025, Mastercard added back $1.143B of reported depreciation and amortisation and $2.098B of customer incentive amortisation in operating cash flow. Excluding customer incentive amortisation entirely would be too conservative because it would treat a non-cash amortisation charge as if it were a recurring cash expense, while giving no credit for the customer incentive liabilities and settlement-related timing benefits that support Mastercard’s cash conversion.

At the same time, we don’t model Delta NWC as a recurring cash inflow. This prevents the opposite mistake of treating customer incentive accounting as a permanent source of free capital. The result is a balanced treatment, at least in our view. :) Customer incentive amortisation is added back as a non-cash item, while Delta NWC is held at 0.0% of incremental revenue rather than, as mentioned before, being modelled as a persistent cash source.

FCFF forecast (USD millions):

2.5. Discount Rate (WACC)

The weighted average cost of capital (WACC) serves as the hurdle rate for our unlevered free cash flows. We construct it using market-based inputs current as of April 21, 2026.

Risk-Free Rate (Rf): 4.30% (We use the U.S. 10-year Treasury yield as the risk-free rate because the model is built in nominal USD. The 10-year Treasury constant maturity yield was 4.30% on April 21, 2026.)

Equity Risk Premium (ERP): 4.77% (The January 2026 U.S. implied ERP was 4.23%, but equity risk premia widened during March 2026. Damodaran’s March-end estimate put the implied ERP for the S&P 500 at 4.77%.)

Beta (β): 0.83 (We use Mastercard’s commonly quoted 5-year monthly market beta)

Cost of Equity (Ke)

Ke = Rf + β x ERP

Ke = 4.30% + 0.83 x 4.77%

Ke = 8.26%

Pre-Tax Cost of Debt (Kd): 4.30%

We use a 4.30% pre-tax cost of debt, based on current market yields for Mastercard’s outstanding notes.

Tax Shield: 21.0%

We apply a normalised 21.0% tax rate for the debt tax shield, consistent with the tax rate used in the operating model after 2026

After-Tax Cost of Debt

Kd x (1 - t) = 4.30% x (1 - 21.0%) = 3.40%

Capital Structure

We use market-value capital structure weights. Mastercard’s April 21, 2026 share price was $511.35. Using approximately 891.8 million Class A and Class B shares outstanding, this implies an equity market value of roughly $456.0B.

For debt, we use the disclosed fair value of debt of approximately $18.0B rather than the $19.0B carrying value, because we believe WACC should be based on market values where available.

This results in an approximate capital structure of 96.2% equity and 3.8% debt.

WACC Computation

WACC = (Equity Weight x Cost of Equity) + (Debt Weight x After-Tax Cost of Debt)

WACC = (0.80 x 9.43%) + (0.20 × 3.79%)

WACC = (96.2% x 8.26%) + (3.8% x 3.40%)

WACC = 8.06%

Our final used WACC is 8.06%.

Share Hated Moats

2.6. Terminal Value

We calculate the terminal value using the perpetuity growth method, assuming Mastercard continues indefinitely as a going concern.

Terminal Growth Rate (g): 3.0%

We use a 3.0% perpetual growth rate. This is consistent with Mastercard’s 3.0% terminal-year revenue growth rate in 2035 and reflects a mature nominal USD growth assumption for a global payments network rather than a continuation of the company’s explicit high-growth phase.

We believe a 3.0% terminal growth rate is defensible for Mastercard because the company is tied to global nominal payment volume, not only mature developed-market real GDP. It also still benefits from cash-to-digital conversion, commercial payments digitisation, value-added services growth, pricing power and very high incremental returns on capital. However, we do not push the terminal growth rate above 3.0%, because by 2035 Mastercard is already being valued on a much larger revenue and profit base, and perpetual growth should not assume that the company can materially outrun nominal economic activity indefinitely.

Formula used:

TV = FCFF(n+1) / (WACC - g)

The calculation is as follows:

FCFF(Y11) = FCFF(Y10) x (1 + g)

FCFF(Y11) = 35,439 x 1.030 = 36,502

TV = 36,502 / (0.0806 - 0.0300)

TV = 36,502 / 0.0506

Terminal Value = $721,387 million

Sanity Check: The present value of the terminal value represents approximately 64.8% of total enterprise value. That is reasonable for a high-quality, high-duration compounder with strong terminal economics. It is not unusually high for a business with Mastercard’s margin structure, asset-light model, pricing power and long runway for electronic payment penetration.

3. Results

We sum the present value of the explicit forecast-period free cash flows and the present value of the terminal value to arrive at enterprise value.

Using the 8.06% WACC, the present value of FCFF from 2026 to 2035 is approximately $180.9B. The present value of the terminal value is approximately $332.3B. This gives an enterprise value of approximately $513.2B before non-operating adjustments.

PV of FCFF (Years 1–10): 180,879 million

PV of Terminal Value = $332,291 million

Enterprise Value (EV):

$180,879 million + $332,291 million = $513,170 million

Equity Value Bridge:

To bridge from enterprise value to equity value, we add excess cash, short-term investments and equity investments, then subtract debt and debt-like obligations.

We use the fair value of debt rather than carrying value because the DCF is a market-value exercise. Mastercard disclosed $19.0B of carrying debt and $18.0B of fair value debt at year-end 2025. We also subtract operating lease liabilities as a conservative debt-like adjustment, although the impact is small relative to total value. All numbers in USD millions.

Enterprise Value: $513,170 million

+ Cash & Cash Equivalents: $10,566 million

+ Investments: 332 million

+ Equity Investments: $1,705 million

- Fair Value of Debt: $18,000 million

- Operating Lease Liabilities: $833 million

= Total Equity Value: $506,940 million

Intrinsic Value per Share

For the share count, we don’t use 2025 weighted-average diluted shares as the primary denominator because Mastercard continued to repurchase stock during the year, meaning the weighted-average figure overstates the current share base.

Mastercard disclosed 885.2 million Class A shares and 6.6 million Class B shares outstanding as of February 6, 2026, for total basic shares outstanding of approximately 891.8 million.

Value per share:

Intrinsic Value per Share = Equity Value / Estimated Current Shares Outstanding

Intrinsic Value per Share = 506,940 / 891.8 = $568.5 per share

Subscribe now

4. Scenarios

Bear case: $405 per share

Inputs: WACC rises to 8.6% due to a higher regulatory risk premium and a more demanding market discount rate. Terminal growth falls to 2.0%. EBIT margins cap at 59.0% rather than reaching 60.5%. Revenue growth decelerates faster, with 2035 revenue reaching approximately $58.7 billion rather than $66.4 billion, as merchant fee pressure, litigation, lower cross-border intensity and tougher competitive conditions reduce Mastercard’s pricing and mix benefits.

Outcome: Mastercard still remains a high-quality business, but the stock is valued more like a mature regulated payments utility than a premium global compounder.

At the current price (April 24, 2026 close), this signals a -19.7% downside in the bear case.

Base case: $568.5 per share

As modelled above, our base case uses an 8.06% WACC, a 3.0% terminal growth rate, a 60.5% terminal-year GAAP EBIT margin, and 2035 revenue of approximately $66.4 billion.

Outcome: This represents a +12.8% upside from the current price.

Bull case: $806 per share

Inputs: WACC compresses to 7.15% as market risk premia normalise and investors place a higher value on Mastercard’s durability, margin quality and cash conversion. Terminal growth rises to 3.25%. Mastercard sustains stronger value-added services growth, cross-border remains structurally robust, and commercial payment digitisation contributes more meaningfully than in the base case. EBIT margins expand to 62.0% by 2035, while 2035 revenue reaches approximately $72.5 billion.

Outcome: Mastercard is valued as a scarce, wide-moat, long-duration compounder with superior cash conversion and a long runway for electronic payment penetration.

The bull case represents +59.9% upside from the current price.

Share

5. Conclusion: Margin of Safety & Final Verdict

Margin of Safety = 1 – (Current Price / Intrinsic Value)

Margin of Safety = 1 – ($504.17 / $563.5) = 11.3%

Based on our base-case intrinsic value of approximately $568.5 per share and Mastercards’s April 24, 2026 closing price of $504.17, the stock offers a margin of safety of roughly 11.3%. Under the valuation scale generally used in our analysis, this places Mastercard in the modestly undervalued to fairly valued category, with arbitrarily assigning a Fairly Valued verdict (MoS <15%).

Final verdict: Modestly Undervalued to Fairly Valued

Share Hated Moats

Mastercard is not a deep-value opportunity, but it remains a high-quality compounder trading modestly below our estimate of fair value. We see it in a way that the market already recognises the strength of the franchise, while still applying a justified discount for litigation, regulation and merchant-pricing risk.

Given Mastercard’s strong operating momentum, durable cash generation and long runway in digital and commercial payments, we believe the risk-reward remains favourable for long-term investors focused on quality and compounding rather than a wide margin of safety, getting the classic “wonderful business at fair price”. we consider starting a position at these levels to be a solid choice, especially if one believes in execution of (or close to) bull direction.

Price where is clearly undervalued: $479 per share

Price where we would buy in heavily: $450 per share

Our strategy: Selling puts with $480 strike price.

Disclosure

The author of this article does not hold a position in the security of Mastercard Incorporated at the time of publishing this valuation. This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security.

We would really appreciate if you find a little of your precious time to like, comment, and restack this post. Thank you!

Leave a comment

What are your thoughts on our valuation analysis of Mastercard?

Are you holding? Buying? Avoiding?

Why?

Let us know in the comments! :)

Do the original assumptions still hold, or does the model need to move because we were too optimistic, or too pessimistic? The result is a clean scorecard across the our little Hated Moats universe. Some theses held almost perfectly. A few needed modest trims or upgrades. And in several cases, the gap between price and intrinsic value is still wide enough to make this market look far less efficient than it wants to appear. :)

We give brief reminder of our original assumptions, summary of what has (or hasn’t) changed about the company since the valuation was published, and with these facts, we update (or keep) the current intrinsic value and margin of safety based on the current price (as of market’s close on April 17, 2026).

Let’s go for it!

Novo Nordisk

Our original valuation model of was posted on October 24, 2025, as the very first DCFriday format post. Since then, we believe the fundamentals of Novo has changed, and we reflected it in the updated article about the valuation. This latest version was posted in March, 2026.

Analysis published: March 6, 2026

Original article:

What changed since?

We are trimming the model modestly because since our March 6 publication, the new information points to somewhat stronger pricing pressure and slightly tougher oral competition. Novo cut Ozempic and Wegovy prices (again) in India after semaglutide patent expiry and generic entry, while Lilly’s newly approved oral obesity pill Foundayo added favourable cardiovascular data on April 16, which strengthens Lilly’s position in the oral segment (though we knew FDA has asked some questions about Foundayo). On the other hand, Novo’s pill appears to be generally the “better” one, so up until Lilly’s pill is properly out and we see the real numbers in big enough time period, this discussion remains in the guessing territory. We’re still rather safe than sorry, especially with Novo, as our experience has been a painful one so far.

Our original DCF already treated 2026 as a trough / reset year with a -9% revenue decline, a 42.0% EBIT margin fading to 40.0%, 7.0% WACC and 2.0% terminal growth, so we keep the 2026 trough assumptions and discount rate unchanged, but now we trim medium-term revenue growth by 0.5% in 2027-2030, by 0.25% in 2031-2035, and lower the end-state EBIT margin from 40.0% to 39.5%.

The current valuation and margin of safety:

The result is a base-case intrinsic value cut from DKK 476.4 to DKK 462.5 per share, which we believe reflects a slightly softer recovery path rather than a broken thesis. Price as of April 17, 2026 was DKK 260.40.

• Intrinsic value: DKK 462.5 (roughly $73 per share, ADR-wise)

• Current price: DKK 260.40

• Margin of safety: 43.7%

• Upside to intrinsic value: +77.61%

• Verdict: Deeply Undervalued

  

  Share

Adobe

Analysis published: Novemeber 1, 2025

Original article:

What changed since?

We are changing the model only modestly here with because the underlying execution since the November 1, 2025 article has actually been slightly better than we assumed. FY2025 revenue came in at $23.77B, up 11% YoY and slightly above the guidance midpoint used in the original model, while Q1 FY2026 delivered $6.40B revenue, +12% YoY, 13% subscription growth, AI-first ARR more than tripled YoY, and GAAP operating income of $2.42B, which implies a c. 37.8% operating margin and makes our earlier near-term margin compression look a bit too harsh.

As a result, we replace the original FY2025 revenue assumption of 10.1% growth with the actual FY2025 result, lift medium-term revenue growth by 0.25% in FY2027-FY2030, raise the EBIT margin path by 0.5% in FY2026-FY2028, and increase terminal EBIT margin from 37.0% to 37.5%. At the same time, we deduct roughly $2.05B from equity value to reflect the announced $1.9B Semrush acquisition and the $150M DOJ settlement.

The current valuation and margin of safety:

The net effect of the above changes is a base-case intrinsic value increase from $423.3 to $432.0 per share.

• Intrinsic value: $432

• Current price: $244.45

• Margin of safety: 43.41%

• Upside to intrinsic value: +76.7%

• Verdict: Deeply Undervalued

  

  Subscribe now

dLocal

Analysis published: Novemeber 7, 2025

Original article:

What changed since?

A modest change in our model here because ‘s actual FY2025 scale came in stronger than we had assumed, but with a slightly worse mix. Our original DCF used FY2025 revenue growth of 37.0%, implying about $1.022B of revenue, whereas the company actually delivered $1.094B, up 47% YoY, with operating profit of $220m, up 57% YoY. At the same time, gross profit margin fell from 40% to 37%, and management’s 2026 outlook explicitly points to structural volume-based discounting and a temporarily heavier 1H26 cost base, even though guidance still calls for 50% to 60% TPV growth and 27.5% to 32.5% operating profit growth.

As a result, we replace the original FY2025 revenue assumption with the actual result, keep the long-term revenue growth curve otherwise unchanged, trim the EBIT margin path by 0.25% from Year 4 onwards, and lower terminal EBIT margin from 19.25% to 19.00%, while leaving WACC and terminal growth unchanged.

The current valuation and margin of safety:

The net effect here is a base-case intrinsic value increase from $22.49 to $23.30 per share.

• Intrinsic value: $23.30

• Current price: $13.68

• Margin of safety: 41.3%

• Upside to intrinsic value: 70.3%

• Verdict: Deeply Undervalued

  

Meta

Analysis published: Novemeber 14, 2025

Original article:

What changed since?

We are trimming the model modestly because the post-publication evidence is directionally mixed, to say the least. The operating business was slightly stronger than we assumed, but the AI investment bill is now clearly higher. In the original November 14, 2025 DCFriday, we used FY2025 revenue of $198.57B, FY2025 capex of $70.0B, FY2026 capex of $105.0B, FY2027 capex of $110.0B, and an EBIT margin trough of 36.0% over FY2026-FY2028, which produced a base-case intrinsic value of $789.7 per share.

Meta then reported actual FY2025 revenue of $200.97B, operating income of $83.28B and capex of $72.22B, but also guided FY2026 total expenses to $162-169B and FY2026 capex to $115-135B. We therefore replace FY2025 assumptions with actuals, raise FY2026 capex to $125.0B from $105.0B, raise FY2027 capex to $120.0B from $110.0B, and trim the near-term EBIT margin trough from 36.0% to 35.5%, while leaving WACC at 9.4%, terminal growth at 2.0% and terminal EBIT margin at 40.0% unchanged.

The current valuation and margin of safety:

The result is a revised base-case intrinsic value of $773.0 per share, down from $789.7.

• Intrinsic value: $773

• Current price: $668.55

• Margin of safety: 13.5%

• Upside to intrinsic value: 15.6%

• Verdict: Fairly Valued

  

  Thanks for reading Hated Moats! This post is public so feel free to share it.

  Share

Uber

Analysis published: December 19, 2025

Original article:

What changed since?

We are adjusting the model only a little bit because the core business has executed a bit better than we assumed, but the autonomous strategy now looks somewhat more capital-intensive than the original “hybrid partner, no metal on our balance sheet” framing. In the original December 19, 2025 DCFriday, we modelled 2026 revenue growth of 16.0%, a starting EBIT margin of 10.0%, capex at 0.6% of revenue fading to 0.5%, WACC of 8.2%, terminal growth of 2.5%, and a base-case intrinsic value of $106 per share.

Since then, Uber reported FY2025 revenue of $52.0B, GAAP operating income of $5.6bB, a 10.7% operating margin, and $9.8B of FCF, while Q1 2026 guidance still pointed to 17%-21% constant-currency Gross Bookings growth. At the same time, Uber committed to invest up to $1.25B in Rivian through 2031 and outlined large-scale robotaxi deployments with Rivian, NVIDIA, and Zoox, which means our original reinvestment assumptions were a touch too optimistic. We therefore keep the revenue path broadly unchanged, raise the starting EBIT margin from 10.0% to 10.5%, reduce diluted shares from 2,124m to 2,120m, but lift capex from 0.6% to 0.8% of revenue in 2026-2028 and from 0.5% to 0.6% in the terminal year, while leaving WACC and terminal growth unchanged.

The current valuation and margin of safety:

The net effect here is a slight base-case intrinsic value trim from $106 to $104 per share.

• Intrinsic value: $104

• Current price: $77.12

• Margin of safety: 25.85%

• Upside to intrinsic value: +34.85%

• Verdict: Undervalued

  

Mo-Bruk

Analysis published: January 2, 2026

Original article:

What changed since?

We’re not changing the Mo-Bruk operating model yet because since our January 2 publication there hasn’t been any new annual or quarterly financial print that would justify a full DCF reset or a change, with the 2025 annual report scheduled for April 23, 2026. The news since publication has mostly validated the thesis rather than altered it, as far as we know.

On January 7, Mo-Bruk received final SKO decisions fully cancelling the increased-fee proceedings for 2016 and 2020, removing legal claims worth PLN 17.5m and PLN 104.7m respectively, while the company also added new hazardous-waste removal contracts in Częstochowa and Zgierz worth up to PLN 7.49m net and PLN 6.89m net. These developments reduce legal overhang and support backlog, but without a fresh full-year financial print we don’t think it is disciplined to change the revenue, margin, capex, WACC, or terminal assumptions yet.

The current valuation and margin of safety:

We keep the base-case intrinsic value unchanged at PLN 451.0 per share.

• Intrinsic value: PLN 451

• Current price: PLN 355

• Margin of safety: 21.3%

• Upside to intrinsic value: +27%

• Verdict: Undervalued

  

Netflix

Analysis published: January 18, 2026

Original article:

What changed since?

We are adjusting the model modestly, with yesterday’s earnings report fully included, because the fresh data were fundamentally mixed. Q1 2026 was strong, but Q2 guidance slowed and Reed Hastings’ surprise exit clearly hit sentiment. In the original January 18, 2026 DCFriday, we used 2026 revenue growth of 16.0%, a starting EBIT margin of 27.0%, a terminal EBIT margin of 35.0%, WACC of 9.1%, terminal growth of 2.5%, and a base-case intrinsic value of $96 per share. Yesterday, Netflix reported Q1 2026 revenue of $12.25B, up 16% YoY, operating income of $4.0B, a 32.3% operating margin, unchanged full-year 2026 guidance of $50.7B-$51.7B and a 31.5% operating margin target, plus net debt of just $2.12B. At the same time, Q2 guidance points to only 13% revenue growth, and we all saw the shares fell nearly 10% in pre-market. Hastings said he will not seek re-election.

Accounting for all of this, we cut 2026 revenue growth from 16.0% to 13.3% based on the midpoint of current guidance, trim 2027-2030 revenue growth by 0.25% each year, raise the starting EBIT margin from 27.0% to 30.0%, lift the terminal EBIT margin from 35.0% to 35.5%, and reduce net debt in the equity bridge from about $5.2B to $2.1B, while leaving WACC and terminal growth unchanged.

The current valuation and margin of safety:

The result is a revised base-case intrinsic value of $103 per share, up from $96.

• Intrinsic value: $103

• Current price: $97.31

• Margin of safety: 5.5%

• Upside to intrinsic value: +5.8%

• Verdict: Fairly Valued

  

  Thanks for reading Hated Moats! Subscribe for free to receive new posts and support our work.

Constellation Software

Analysis published: January 23, 2026

Original article:

What changed since?

We are lifting the CSU model slightly because the post-publication data point to an acquisition engine that is still running at least as well as we assumed, not worse. In the original January 23, 2026 DCFriday, we used 2026 revenue growth of 15.0%, a starting EBIT margin of 12.0%, a terminal EBIT margin of 17.0%, an incremental ROIC of 18.0%, WACC of 6.2%, terminal growth of 3.0%, and a base-case intrinsic value of C$3,643 per share.

Since then, Constellation reported FY2025 revenue of $11.623B, up 15% YoY, with 4% organic growth for the year, while Q4 revenue grew 18% with 6% organic growth, FCFA2S rose 14% to $1.683B for the year, post-year-end acquisition commitments totalled $802m, and on April 14 Juniper agreed to acquire a majority interest in Derbysoft, all of which suggests the capital deployment machine remains healthy. so, we keep WACC, terminal growth, ROIC, and the EBIT margin path unchanged, but raise 2026 revenue growth from 15.0% to 15.5% and 2027 growth from 15.0% to 15.25% to reflect a slightly stronger near-term operating and acquisition cadence.

The current valuation and margin of safety:

The result is a revised base-case intrinsic value of C$3,725 per share, up from C$3,643.

• Intrinsic value: C$3,725

• Current price: C$2,626.45

• Margin of safety: 29.5%

• Upside to intrinsic value: +41.8%

• Verdict: Undervalued

  

Wix

Analysis published: January 30, 2026

Original article:

What changed since?

We are adjusting the model in a nuanced but net positive way because the operating update and the capital-structure update point in opposite directions. FY2025 and 2026 guidance broadly validate the revenue thesis, but they also signal a heavier investment year than we originally modelled, while the Dutch auction materially reduced the share count at a price far below our base-case value. In the original January 30 DCFriday, we used 2026 revenue growth of 14.0%, a 2026 GAAP EBIT margin of 11.0%, capex of 1.5% of revenue in 2026-2028, a 10.0% WACC, 3.0% terminal growth, and 58.3 million diluted shares, which produced an intrinsic value of $145 per share.

Since then, Wix reported FY2025 revenue of $1.99B, FY2025 operating income of just $1.8 million, Base44 at $100 million ARR, guided 2026 revenue to mid-teens growth and FCF margin to the low-to-mid-20% range, then accepted 17.58 million shares in the tender offer at $92 for roughly $1.617 billion after issuing 3.27 million shares in the Durable-led private placement. Because of this, we keep the revenue path broadly unchanged and leave WACC and terminal growth unchanged, but trim the 2026 GAAP EBIT margin from 11.0% to 9.5%, trim the 2027-2028 margin path by 0.5% each year to reflect heavier AI/Base44 investment, reduce capex from 1.5% to 1.25% in 2026-2028 in line with management’s $25-30 million capex guide, and cut our per-share proxy from 58.3 million to 44.0 million net of the tender and placement.

The current valuation and margin of safety:

The result is a revised base-case intrinsic value of $157 per share, up from $145.

• Intrinsic value: $157

• Current price: $68.24

• Margin of safety: 56.5%

• Upside to intrinsic value: +130%

• Verdict: Deeply Undervalued

  

  Share Hated Moats

ServiceNow

Analysis published: February 20, 2026

Original article:

What changed since?

We’re not changing the model for now :) because there has been no new quarterly or annual financial print since our February 20 publication that would justify a disciplined DCF reset. Our original article was published after the January 28 Q4 FY2025 release, so it already incorporated FY2025 subscription revenue of $12.883B, cRPO of $12.85Bn, full-year 2026 subscription revenue guidance of $15.53B-$15.57B, and the fact that guidance included roughly 100bps of Moveworks contribution.

With Q1 2026 results only scheduled for April 22, the prudent move is to leave the operating model unchanged at this point in time. We keep the original base-case assumptions of 20.5% revenue growth in 2026 fading to 4.5% by 2035, GAAP EBIT margin expansion from 15.0% to 22.5%, 8.5% WACC, and 2.5% terminal growth.

The current valuation and margin of safety:

That means the base-case intrinsic value remains $160.1 per share, unchanged from our original publication.

• Intrinsic value: $160.1

• Current price: $96.66

• Margin of safety: 40%

• Upside to intrinsic value: +65.63%

• Verdict: Deeply Undervalued

  

Nvidia

Analysis published: March 20, 2026

Original article:

What changed since?

We are not changing the Nvidia model at this stage because there has been no new quarterly or annual financial print since our March 20 publication, and Nvidia’s next Q1 FY2027 results are only scheduled for May 20, 2026. Most of the news flow since publication has been thesis-validating rather than model-moving, i.e. and both signalled that AI infrastructure demand remains strong, while also invested $2 billion in Marvell to deepen its custom-AI ecosystem, but none of that yet gives us a sufficiently precise basis to change the revenue curve, margin path, or reinvestment assumptions in a disciplined way.

In the original DCF, we used 40.0% FY2027 revenue growth, EBIT margins peaking at 64.0% before normalising to 57.5% by FY2036, a 9.6% WACC, and a 3.0% terminal growth rate, which produced a base-case intrinsic value of $179.04 per share.

The current valuation and margin of safety:

• Intrinsic value: $179.04

• Current price: $201.68

• Margin of safety: -12.65%

• Upside to intrinsic value: -

• Verdict: Fairly Valued

  

  Leave a comment

SalesForce

Analysis published: April 3, 2025

Original article:

What changed since?

We are not changing the model at this stage because the article was published only on April 3, 2026, after FY2026 results, the FY2027 guidance framework, the Informatica contribution, and the post-ASR capital structure were already incorporated into the valuation. Our original DCF already used FY2027 revenue growth of 10.0%, EBIT margin expanding from 20.0% to 30.0%, capex fading from 2.5% to 2.0%, an 8.3% WACC, a 2.5% terminal growth rate, and an estimated post-ASR share count of about 820 million, which produced an intrinsic value of $263.79 per share.

Since publication, the notable updates have been the April 1 completion of the Qualified acquisition and new Agentforce infrastructure announcements at TDX 2026, but neither came with a new financial print, guidance revision, or a clearly quantifiable impact large enough to justify resetting the DCF.

The current valuation and margin of safety:

We leave the model unchanged and keep intrinsic value at $263.79 per share.

• Intrinsic value: $263.79

• Current price: $182.14

• Margin of safety: 31%

• Upside to intrinsic value: +44.8%

• Verdict: Undervalued

  

Microsoft

Analysis published: April 10, 2025

Original article:

What changed since?

We’re not changing the model at this stage because the article was published only on April 10, 2026, after the latest available Q2 FY2026 financials were already incorporated, and Microsoft’s next earnings release is not until April 29, 2026. Our original DCF already used a base-case intrinsic value of $422.15 per share, with WACC of 8.9%, terminal growth of 3.0%, EBIT margin expanding from 46.0% to 48.0%, and cash capex normalising from 25% of revenue in FY2027 to 10% by FY2036.

Since publication, the relevant news flow has been mostly sentiment-driven rather than model-moving, including a reported hiring freeze in parts of cloud and sales as Microsoft manages AI infrastructure costs, and a new five-year AI partnership with Stellantis, but neither event gives us a sufficiently concrete basis to reset revenue, margin, or reinvestment assumptions as of now, before the April 29 print. Right now, Microsoft is as fairly valued as fairly valued gets. :)

The current valuation and margin of safety:

We keep the base-case intrinsic value unchanged at $422.15 per share.

• Intrinsic value: $422.15

• Current price: $422.79

• Margin of safety: -0.15

• Upside to intrinsic value: -

• Verdict: Fairly Valued

  

  Share

Conclusion

The bottom line is that across this DCFriday update set, very little has happened that truly breaks the original theses of the companies we’ve analysed so far. Most of the models remain broadly intact, with changes driven more by calibration than by structural / fundamental deterioration or major changes. Adobe, dLocal, WIX and CSU saw modest intrinsic value increases as execution broadly met or exceeded expectations, while Novo, Meta and Uber were trimmed slightly due to stronger competitive pressure, heavier investment needs, or a somewhat less comfortable recovery path. Mo-Bruk, ServiceNow, Nvidia, Salesforce and Microsoft remain essentially unchanged because there has been no sufficiently material new financial evidence to justify a disciplined reset. Netflix is the most nuanced case, with stronger margins and balance sheet offset by softer near-term growth and what we belive to be a post-earnings sentiment pressure.

Subscribe now

In valuation terms, the most attractive gaps to our updated base cases currently appear in WIX, Novo Nordisk, Adobe and dLocal, while Uber, CSU, Mo-Bruk and Meta still retain meaningful but smaller upside. ServiceNow’s margin of safety widened mostly because the stock fell quite sharpy while the thesis stayed the same. Microsoft is now trading almost exactly at fair value, and Nvidia remains above our base-case intrinsic value.

Overall, we think the message from this ‘batch’ is encouraging. The vast majority of our work has held up, but the market has become more selective, meaning the opportunity set is now concentrated more heavily in the names where fundamentals remained solid while prices stayed depressed.

We would really appreciate if you find a little of your precious time to like, comment, and restack this post. Thank you!

Leave a comment

What do you think?

Are you buying any of these names?

If so, what’s your thesis beyond valuation?

Let us know in the comments & thank you for reading! :)