Digital transformation is accelerating due to COVID-19, presenting investors with compelling investment opportunities. In part two of our whitepaper series, we discuss why the very best businesses are often undervalued by public equity markets and what this means for investors.
For example, in 2006, Salesforce was trading at 104 times earnings, which many thought was far too expensive. Yet history shows that Salesforce’s shares were worth 10 times that amount at the time, based on how the company has since grown.
The issue is that it’s hard to use traditional valuation methods in a world with such radically new, network-powered businesses as Amazon, Facebook and Google. With that in mind, our whitepaper discusses new approaches for valuing and thinking about such businesses and the high and sustained growth rates they can deliver.
Most importantly, we also consider the significant opportunity costs associated with missing out on investing in them.