Model does not consider non-ergodicity
lucadellanna opened this issue · 0 comments
lucadellanna commented
Tesla might post great 2023 numbers but, if it bankrupts on the way there, its (current) stock goes to $0.
The current price of CDS imply a >40% chance of bankruptcy over the next 5 years.
I do not see it priced at all in your model.
A good way to implement it would be to take the share price as computed from 2023 operations and to weigh it with a 40% possibility of having it stuck to $0.