Aswath Damodaran
Professor of finance at New York University
Born 1957
Teaches valuation at NYU Stern and publishes his datasets, spreadsheets, lecture series and company valuations free online, assumptions included.
Biography
Aswath Damodaran, born in Chennai, India in 1957, is a professor of finance at the Stern School of Business at New York University, where he holds the Kerschner Family Chair in Finance Education. He studied accounting at Loyola College in Chennai and management at the Indian Institute of Management Bangalore before completing an MBA and then a doctorate at UCLA. He taught at the University of California, Berkeley from 1984 and joined NYU in 1986.
His subject is valuation: estimating what a business is worth from the cash it can be expected to produce, adjusted for how long you have to wait and how uncertain the wait is. What separates him from most academics working on the same question is that he gives the whole apparatus away. His site carries the datasets a valuation needs, including implied equity risk premiums, country risk premiums, industry averages and costs of capital, refreshed on a fixed annual schedule with a mid-year update for country risk. Alongside them sit the spreadsheets, and full lecture series with notes and recorded classes.
He also values individual companies in public. On his blog he works through a business, publishes the spreadsheet behind the number, states what he did with his own money, and revisits the valuation when the facts change. That habit has made him a reference point in arguments about how much a young company is worth, and it has also made his disagreements with practitioners unusually visible, because the assumption being argued about is written down for anyone to inspect.
His books run from technical reference works to short introductions for general readers. Narrative and Numbers, published in 2017, sets out the idea he is most associated with outside finance departments: that a valuation is a story about a business translated into forecasts, and that the story and the numbers each keep the other honest. He received the Herbert Simon Award in 2013 for his work in finance education.
Career timeline
- 1957Born in Chennai, India.
- 1979Completes a postgraduate management programme at the Indian Institute of Management Bangalore.
- 1981Completes an MBA at UCLA, and a doctorate there four years later.
- 1984Begins teaching at the University of California, Berkeley.
- 1986Joins the Stern School of Business at New York University.
- 1994Publishes Damodaran on Valuation, his first book aimed at practitioners.
- 2011Publishes The Little Book of Valuation, a short version for general readers.
- 2014Publishes a valuation of Uber and debates its assumptions in public with a director of the company.
- 2017Publishes Narrative and Numbers, on connecting a business story to a number.
- 2024Publishes The Corporate Life Cycle, on how a company's stage changes what its numbers mean.
How he approaches valuation
He separates two activities that most conversations about markets merge. Valuing a business means estimating what its future cash flows are worth today, using its growth, its margins and its risk. Pricing a business means judging what someone else will pay for it, which is set by mood, comparison and flows. Both are real games and both can be played well, but he insists you decide which one you are playing before you start, because the tools are different and the evidence you would need is different.
Every number in a valuation is an assumption wearing a disguise. Growth rate, operating margin, reinvestment, cost of capital and the terminal value are all judgments, and the discipline he teaches is forcing each one out into the open where it can be argued with. A story about a company that cannot be turned into those numbers is not an investment case; a spreadsheet with no story behind it is arithmetic that nobody has to defend.
Uncertainty is the reason to value something, not the reason to avoid it. His position is that you make the estimate knowing it is wrong, keep the assumptions visible, and revise when the facts move. Publishing the spreadsheet is part of the same idea: the useful response to a valuation is not agreement or disagreement with the conclusion but an argument about which input is off, and that argument is only possible if the inputs are on the table.
Key ideas
Tap any idea to expand a plain-English explanation, why it matters, and where to learn more.
Value and price are different numbers
The distinction between what a business is worth given the cash it can produce, and what the market will pay for it on a given day.
They are estimated with different tools and can stay far apart for years, so an investor who confuses them will use the wrong evidence for the decision they are actually making.
A carefully built estimate can say a company is worth less than it trades for and be perfectly consistent with the shares rising for another three years.
Narrative and numbers
The idea that a valuation is a story about how a business will develop, translated into forecasts that can be checked.
It gives a way to argue about companies whose numbers are small or negative today, where a purely mechanical model has nothing to work with.
Whether a young company is worth a lot depends on whether its story is a niche service or a replacement for an entire industry, and the forecast has to say which.
Every input is a judgment
The recognition that growth, margin, reinvestment and discount rate are all estimates, so the output inherits all of their uncertainty at once.
It changes what a valuation is for. The number is a summary of your assumptions, and the productive discussion is about the assumptions rather than the number.
Moving an assumed long-run margin by two points and the discount rate by half a point can change the answer by more than most people expect.
Most of the value sits past the forecast
The point that in a typical discounted cash flow model, the large majority of the value comes from the terminal value beyond the explicit forecast years.
The detailed early years are the part people spend their time on and the part that matters least, which is a good reason to distrust apparent precision.
A ten-year model can be built with great care and still rest mostly on a single assumption about what happens in year eleven and afterwards.
Publish the assumptions, not the conclusion
The practice of showing the spreadsheet and the inputs behind a valuation rather than only the resulting figure.
It makes disagreement specific and useful. Someone can point at the input they think is wrong instead of trading opinions about the answer.
Two people who reach very different values for the same company usually differ on one or two inputs, and finding which ones is the whole conversation.
Major contributions
- Built a complete valuation curriculum, from lecture notes to recorded classes, and made all of it freely available rather than confining it to a paying classroom.
- Publishes the underlying data most valuations need, including implied equity risk premiums, country risk premiums, industry averages and costs of capital, on a predictable schedule.
- Wrote the reference texts that made intrinsic valuation teachable at scale to both students and practitioners.
- Framed valuation as a narrative disciplined by numbers, which gave people a vocabulary for arguing about companies with little or no current profit.
- Values individual companies in public with the spreadsheet attached, which turns valuation from a private conclusion into an argument anyone can join.
Major successes
- Has taught valuation and corporate finance at the Stern School of Business at New York University since 1986, and holds the Kerschner Family Chair in Finance Education there.
- Publishes a full set of valuation datasets and working spreadsheets free of charge, updated each January with a mid-year refresh for country risk.
- Wrote Investment Valuation, which became a standard reference across university courses and practitioner desks alike.
- Received the Herbert Simon Award in 2013 in recognition of his work in finance education.
- Made his lecture series openly available online, so the course reaches an audience far larger than any classroom he teaches in.
Important books
- Damodaran on Valuation1994
His first book on the subject, written for practitioners rather than for a classroom, and covering intrinsic and relative valuation side by side.
- Investment Valuation
The long reference text, revised across several editions. The fullest statement of his framework and the version most often set on courses.
- The Dark Side of Valuation
On the companies the standard framework handles worst: young businesses, those with no earnings, and those in industries whose economics are still unsettled.
- The Little Book of Valuation2011
A short introduction for general readers, cutting the framework back to what an individual can realistically apply.
- Narrative and Numbers2017
His argument that a valuation is a story about a business translated into forecasts, and that each half is a check on the other.
Influence on investors
A large share of the people who value companies for a living learned how from his books, his lecture notes or his recorded classes, and a larger share again use his published data without ever seeing his name on it. An implied equity risk premium or an industry cost of capital taken from his site feeds into models he will never look at, which makes him an unusually invisible influence on the numbers other people publish.
His habit of showing the spreadsheet also changed the norms of the argument. Public valuation disputes are now expected to be specific about which assumption is in question, and a critique that only asserts a different answer reads as weaker than it used to. That standard came in large part from watching him respond to disagreement by editing an input in front of everyone.
Criticisms and debates
A balanced view includes the main criticisms and open debates, presented neutrally.
- A discounted cash flow model is very sensitive to its inputs. Critics argue that small and entirely defensible changes to growth, margin or discount rate can move the answer far enough that the exercise supplies precision without supplying accuracy.
- His public valuations have frequently differed sharply from where the shares went on to trade. His 2014 valuation of Uber, which put the business far below the price investors were paying, drew a detailed public response from Bill Gurley, then a director of the company, who argued that the estimate of the addressable market was far too narrow.
- Most of the value in a typical model sits in the terminal value, beyond any horizon anyone can forecast, so the carefully built detail in the early years can create false confidence in the total.
- Intrinsic valuation is hardest exactly where it is most wanted, on young businesses with no earnings and unsettled economics. His own work says so directly, and critics read that admission as a concession about how much of the output is judgment.
- Some practitioners argue that markets set prices from multiples, flows and sentiment rather than from discounted cash flow, so a well-built intrinsic value can be both correct and irrelevant to what happens next. He draws the same line between value and price himself, which is either the strength of the framework or its boundary depending on who is making the case.
Lessons for investors
Plain-English takeaways. Context for learning, not advice to buy or sell anything.
- 1A valuation is a set of assumptions, so the useful question is always which assumption you disagree with.
- 2What a business is worth and what it trades for are two different numbers, and it matters which one you are estimating.
- 3Detail is not accuracy. A longer model is not a more reliable one, especially when most of its value sits past the forecast.
- 4Writing your assumptions down before you look at the price is what stops the price from writing them for you.
Frequently asked questions
Who is Aswath Damodaran?
Aswath Damodaran is a professor of finance at the Stern School of Business at New York University, born in Chennai in 1957. He teaches valuation and publishes his data, spreadsheets, lectures and company valuations free online.
What is intrinsic valuation?
It is estimating what a business is worth from the cash it can be expected to generate over its life, discounted back to today to account for time and risk. It is a judgment about the business rather than a reading of the share price.
Why does he separate value from price?
Because they are produced by different forces. Value comes from cash flows, growth and risk; price comes from what buyers and sellers will accept today. Both are legitimate to estimate, but the evidence and the tools are not interchangeable.
Are his valuation materials really free?
Yes. The datasets, the spreadsheets and the full lecture series with recorded classes are published openly on his university site, with the data updated on a set annual schedule.
What is Narrative and Numbers about?
It argues that a valuation is a story about how a business will develop, expressed as forecasts. The story stops the numbers from being arbitrary, and the numbers stop the story from being a fantasy.
How reliable is a discounted cash flow valuation?
It is only as reliable as its assumptions, and it is sensitive to them. The useful output is not a single figure but an explicit set of inputs that someone else can examine and dispute.
Which Damodaran book should a beginner start with?
The Little Book of Valuation is the short introduction written for general readers. Investment Valuation is the full reference text and is much more demanding, and Narrative and Numbers is the most readable statement of how he thinks.
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