An online start-up that provides investors with simple modelling tools to help them understand and predict stock prices has launched in the US.
Trefis breaks down the factors contributing to a publicly traded company's stock price and then lets users play with variables in the business model to see how the value is affected.
The site was set up by Manish Jhunjhunwala, Adam Donovan, and Cem Ozkaynak, who have mathematics and Wall Street backgrounds. They have set up initial models for around 50 companies, mainly in technology and the media.
Users choose a stock and are then presented with an easy to understand graphical breakdown of Trefis's reasoning for its stock price.
For instance, the model assumes that the most important division for IBM is middleware, accounting for 44.9% of the stock price.
Click on middleware and you are presented with four predictive charts relating to factors which will affect the share price: licence revenues, software maintenance fee as a percentage of those revenues, annual renewal rate of licenses and EBTDA margin.
The user can then change the assumptions by dragging the chart and see how this would affect the share price before saving their model.
An analysis of each company is also provided, with financial and business details culled from annual reports, quarterly filings and earnings transcripts. Company filings are available from the SEC.
In addition, users can follow other people, viewing their models and any comments they have made as well as share their own ideas on Facebook.
You can sign up to try Trefis for free here.