The “What Must Happen” tab helps investors determine the exact financial conditions required for a stock to generate a desired annual return over a selected time period. By inputting assumptions for future revenue growth and profit margins, users can see the necessary future market cap, stock price, and valuation ratios. This tool is essential for assessing whether investment expectations are realistic, as it also presents critical questions designed to challenge assumptions and encourage more informed decision-making.

How to Use the “Assumptions” Section

To calculate the What Must Happen model, you need to input key assumptions about your investment expectations:

  • Desired Annual Return (%) – Enter the annual percentage return you hope to achieve from this stock investment.
  • Years Later – Specify the time period (in years) over which you expect to reach your return target.
  • Annual Revenue Growth (%) – Estimate how quickly you believe the company’s revenues will grow each year.
  • Future Profit Margin (%) – Predict the company’s net profit margin at the end of your selected time period.

Once you’ve entered these values, click “Calculate” to see the required future stock price, market cap, and valuation metrics needed to meet your return expectations.

If you want a detailed breakdown of the results, click “Show Explanation”, which provides insights into how the calculations were derived and whether your assumptions align with historical data and realistic market conditions.

The table displaying the last 10 years of financial statement data provides a comprehensive overview of key financial metrics that are essential for evaluating a company’s economic health and growth trajectory. Each column is designed to give investors and analysts a snapshot of the company’s financial position and changes in its capital structure over the decade. By reviewing this data, one can assess trends such as revenue growth, changes in equity, and shifts in shareholder composition, all crucial for making informed investment decisions. The table not only serves as a historical record but also as a tool for projecting future performance and stability.

Using the “Critical Questions” Table

At the bottom of the “What Must Happen” tab, you’ll find a set of critical questions designed to help you assess whether your assumptions are realistic. These questions challenge the feasibility of the projected market cap, revenue growth, and valuation multiples required to achieve your desired return.

By going through these 14 key questions, you can perform a mental check on your investment thesis. Questions cover topics such as:

  • Historical precedents – Have other companies ever achieved similar revenue growth rates, P/S ratios, or market caps?
  • Market realism – How much of the total market would this company represent if it hit your projected numbers?
  • Valuation likelihood – What are the probabilities of a stock maintaining a P/E ratio of 99 or a P/S ratio of nearly 10?

Each question is linked to an AI-generated answer that provides further context. These checks help prevent overly optimistic expectations and encourage rational, data-driven decision-making before committing to an investment.