Have you ever wanted to be a Wall Street analyst or come up with your own discounted cash flow model for a publicly traded company? Me neither, but I like the idea of tweaking a few variables in a company’s business model and seeing how that might change a its stock price. A new site launching today called Trefis lets you do just that.
Started by three engineers and math whizzes from MIT and Cornell (Manish Jhunjhunwala, Adam Donovan, and Cem Ozkaynak) who did time at McKinsey and UBS bank, Trefis breaks down a stock price by the contribution of a company’s major products and businesses. For instance, 51.3 percent of Apple’s stock price is attributed to the iPhone, 25.5 percent to the Macintosh, and only 7.7 percent to iTunes and iPhone apps. Don’t agree? You can change the underlying assumptions by simply dragging lines on charts forecasting the future price of the iPhone, its market share going out to 2016, and so forth. Every time you change an assumption, the price target changes accordingly.
Underlying each stock price breakdown is a traditional discounted cash flow model created by Trefis. At launch, the site has models for Apple, Google, Microsoft, Yahoo, HP, Netflix, Intel, the New York Times, and others. You change the models all you like by playing around with the underlying assumptions, then save and share your model. The way the site is set up, you don’t need to create a model for every variable which might affect a stock. If you have a strong opinion about the iPhone’s future market share and nothing else, you can just create a model about that component, along with comments explaining your reasoning.
There is a social element to Trefis in that you can follow other people, and they can follow you. Over time, the founders of Trefis hope to be able to create a marketplace between investors and experts in particular fields, who might charge subscription fees for access to their models.
Trefis raised $550,000 in an angel round in November, 2008, during the depths of the financial crisis. The round was led by Timothy Weller, CFO of Enernoc and former CFO of Akamai, Bob Johnson of the MIT corporation, and Semyon Dukach, former president of the MIT Blackjack team.