Motivation: This post is about stock price modeling. People often says something like "the price is linked to the grouth and future expectations of a company". I'd like to convert these words into numbers and formulas, to understand things better.

Problem setting: Imagine you are seer (*) and you know the future of a company exactly: assets overtime a(t), liabilities overtime l(t), all cash in/out streams c(t), income overtime i(t) and all distributions amounts with dates d(t), etc. Imagine the company has 1000 shares and this number never changes. Imagine you don't know the future stock price, you know only the current price P_0

Question: How would you calculate the future stock price P(t) as a function of the know parameters above.


  • I realize that the stock price may strongly depend on other company factors not listed above (brand value, visibility,...), or may depend on the probability distributions of the parameters, or may depend on parameters that are external to the company (GDP, probability of a viral pandemic where the company operates,...). Feel free to add/remove and use the parameters you think are the most important.
  • I realize that there is no unique answer to the question. The stock price can have different models, some may be simple and not very accurate, others more complex and more accurate. I am interested in reasonably accuarte models.
  • I realize that nobody can use these formulas because nobody knows the future, it is just to understand things.

(*) This is purely hypothetical and unrealistic, but I think it is an interesting prospective to understand how things work

  • 2
    There are a lot of potential issues with the way you have phrased your question. It is unclear if you have researched any valuation models at all. Start with the Dividend Growth model. If you know the value of a future stream of income, and relevant risk rate, you can determine the current value of that asset. Be very careful. You appear to be in over your head. Nov 21 at 14:35
  • 2
    Even if you would know all those parameters (and all external factors like inflation, epidemics, wars or reddit trolls) perfectly for the future, you still would not be able to predict the stock price, as long as all others are not seers too - as the future stock price will then still depend on the expectations of others on, well, the stock price of the future's future, which does not have to be the "correct based value based on fundamentals in the future" (which is, as GradeEhBacon noted, something you could directly translate to today's money).
    – Solarflare
    Nov 21 at 15:35
  • @Solarflare Thank you for the explanation. I've learned something new today.
    – Fuzzy
    Nov 25 at 13:14


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