The business model, Company valuation and covid-19: a model applied in Argentinian market

Abstract

The current health crisis translates into a black swan that impacted all economies. Unlike other crises whose impact was general, this one affected certain business segments. Particularly those with markets focused on transportation, leisure and discretionary consumption, with intensive use of the human factor for operations and significant financial leverage applied to significant capital stocks. Along these lines, company valuation models, more than ever, must be based on value fundamentals and macroeconomic risks. Argentina, as an emerging market, adds to the difficulty of the important inflationary process. The work proposes a valuation model where the own risks and value foundations are incorporated in the projected flows and the systemic risks are contained in the rates. The model proposes the valuation in two currencies, legal tender and US dollars, within the framework of theories of parity of interest rates and purchasing power.