Jeff's Newsletter · An Interactive Toy

NPV Is a
Cruel Beast

A stock is the value of all the cash a business will ever produce, translated into today's dollars. Two dials control everything: how the business does (the cash flows) and the discount rate (what investors charge to wait, set by interest rates plus risk). Drag them. Watch thirteen years of Fox Factory happen in your browser.

Implied FOXF share price
$0.00

Dial 1: how does the business do?

3.0%

Yearly free cash flow growth for the next decade. Fox starts from roughly $130M a year.

FlatGDP-ishBike-market ceilingNeeds new verticals

Dial 2: what do you charge to wait?

12.0%

The ten-year Treasury pays about 4.7% risk-free. Everything above that is the risk premium: certain cash flows earn a low discount rate, scary ones earn a high one. This dial is basically "how much do you trust the story?"

CompounderQuality industrialLevered cyclicalShow-me story

Why the equity takes the hit

The dials price the whole business (enterprise value). But the banks get paid first: net debt is a fixed $606M no matter what the dials say. Shareholders own whatever is left. Now drag Dial 2 to the right and watch who absorbs the damage.

Enterprise value: $1.5B
Net debt $606M (fixed) Equity $0 (the residual)

The whole curve

Implied share price across every discount rate, at your chosen growth. Your setting is the dot.

The catch: Fox already owns its market

Premium suspension on mountain bikes, side-by-sides, and aftermarket trucks is largely a Fox and RockShox world, and Fox took most of it years ago. When you already have the market, your growth is the market's growth, and bikes compound at maybe 5 to 10% in a great decade.

So dragging Dial 1 past 10% is not a bet on Fox executing. It's a bet on new verticals: industrials, the autonomous vehicle award nobody asked about on the call, damping intelligence on things that aren't bikes or trucks. Maybe! Just know that's the bet you're making.

And notice what the 2021 preset requires: compounder-grade trust and new-vertical growth, at the same time, forever. That's what a $187 share price was quietly assuming.

The model, in one breath: ten years of free cash flow growth at your Dial 1 rate, plus a terminal value growing 2.5% forever, all discounted to today at your Dial 2 rate. Starting free cash flow of ~$130M is guidance-implied for fiscal 2026 (~$186M midpoint EBITDA, less ~2% of sales in capex, less cash taxes). Net debt of $606M and 41.8M shares as of Q2 fiscal 2026.

This is a teaching toy, not a valuation model, and absolutely not investment advice. Real analysts argue about every one of these inputs for a living. That's the point: now you know which arguments matter.

Jeff Brines · Jeff's Newsletter