Intangible Asset and Stock Evaluation A New Options Approach applied to Cloud-oriented Firms.

Intangible Assets evaluation still represents a contemporaneous accounting and financial problem for discrepancies between different accounting principles (i.e., GAAP vs IFRS), but furthermost for the intrinsic features like scalability and internal development. Value investing strategy (like Graham and Warren Buffet’s ones) suggest not considering I.A. in the calculation of the intrinsic value of a firm which is based on a “conservative multiple” of future profits forecasted according to actual trends. Nowadays, some of the largest companies in the world like Apple, Microsoft, Alphabet, Tesla …etc, burn huge quantities of their cash and profits investing in I.A. like patents, brands, and Software. A relevant part of investors uses to pay a premium to buy stocks, upsetting the logic of Value investing. However, could this systematic cloud revolution set a new standard of competitiveness between young firms and incumbent ones? Is it possible to find a new target value for those kinds of firms which can justify the P/E LTM of Zoom equal to 300 (CQ2 2020) as a signal of consistent performance? In the following pages, I develop a new evaluation criterion for investment in intangibles due to their components (timing of the investment, costs, etc…) which summed to the Book Value gives the correct total value of the stock. Finally, I try to exploit the premium found in an option strategy to catch an enhancement. I conducted the corresponding qualitative and quantitative analysis using an automized algorithm to ensure the update and the replicability of the results.