Aswath Damodaran: Value Investors Should Consider Young Growth Money Losing Companies

Johnny HopkinsAswath DamodaranLeave a Comment

In his recent interview on Business Today, Aswath Damodaran discussed why value investors should consider young growth money losing companies at the right price. Here’s an excerpt from the interview:

Damodaran: The alternative, and you’re not going to like what I say, requires that you do the hard work of assessing what value is and where it comes from, and that’s a much richer question because value can come from not just earnings last year or earnings next year but can come from growth, it can come from the cash flows you generate as a business.

You can be a value investor and buy a young growth company that’s money losing. I know that sounds contradictory but a young money losing company at the right price is a much better investment than an old mature money making company at the wrong price. So I think we need to expand our definition of what value is for value investing to make a comeback.

You can watch the entire discussion here:

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