What is LIZI's Intrinsic value?

Lizhi Inc (LIZI) Intrinsic Value Analysis

Executive Summary

As of May 31, 2025, Lizhi Inc's estimated intrinsic value ranges from $20.51 to $62.67 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $62.67 +2138.2%
Discounted Cash Flow (5Y) $53.43 +1808.3%
Dividend Discount Model (Multi-Stage) $20.51 +632.5%
Dividend Discount Model (Stable) $25.68 +817.0%

Is Lizhi Inc (LIZI) undervalued or overvalued?

With the current market price at $2.80, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Lizhi Inc's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 4.2% 4.7%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.86 1.83
Cost of equity 8.1% 15.4%
Cost of debt 5.0% 5.0%
Tax rate 0.1% 0.3%
Debt/Equity ratio 0.69 0.69
After-tax WACC 6.9% 11.1%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 9.0% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $2,185 (FY12-2022) to $4,607 (FY12-2032)
  • Net profit margin expansion from 4% to 4%
  • Capital expenditures maintained at approximately 2% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $384 $1,350M 69.7%
10-Year Growth $450 $1,701M 50.7%
5-Year EBITDA $567 $2,320M 82.4%
10-Year EBITDA $620 $2,600M 67.8%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 11.8%
  • Long-term growth rate: 0.5%
  • Fair value: $20.51 (632.5% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 15.4% (Low) to 8.1% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $98 to $271
  • Selected fair value: $25.68 (817.0% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $15M
Enterprise Value $-80M
Trailing P/E 0.93
Forward P/E 1.08
Trailing EV/EBITDA 17.55
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.69

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 33% $18.80
Discounted Cash Flow (5Y) 28% $13.36
Dividend Discount Model (Multi-Stage) 22% $4.10
Dividend Discount Model (Stable) 17% $3.85
Weighted Average 100% $44.57

Investment Conclusion

Based on our comprehensive valuation analysis, Lizhi Inc's weighted average intrinsic value is $44.57, which is approximately 1491.8% above the current market price of $2.80.

Key investment considerations:

  • Strong projected earnings growth (4% to 4% margin)
  • Consistent cash flow generation

Given these factors, we believe Lizhi Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.