I’ve been modelling Netflix - 12-13% annual revenue growth, growing EBIT margin > 28% and even a terminal growth rate of 4%. Despite this, my DCF is spitting out 26% overvalued.
The main issue is WACC. Per those free DCF valuation sites, they all seem to use a WACC of 7-8%. By contrast, my calculated WACC is 10.8%: 0.065 D/E ratio (using market value of equity), 4.7% cost of debt and 11.2% cost of equity (beta of 1.51).
***What am I missing?***