hi WSM,
You are right that if real rates only go up for a while or so and start falling back again, then it won’t make much of a difference to your DCF.
However we are at negative real rates now (-1%) which is exceedingly rare in modern times and really exists for a prolonged period during the Covid era (prior to that, it was negative only briefly and mostly during recessions).
As we look past the pandemic and as QE wraps up, I believe it quite probable that real rates will re-rate permanently back to where it was before the pandemic - unless you believe that we are in a perpetual state of QE (not possible since that’s wrapping up) and recession-like conditions.
If real rates mean reverts, I believe we are nowhere near to a bottom even after this carnage.
However hypergrowth over time (this is important) should overcome that given its high growth; but we are getting hit now because there isn’t enough time for forward estimates to grow (the numerator in a DCF valuation) to overcome a rapid rise in rates (the denominator). I mean how much can forward estimates change in 60 days since real rates start ramping up in Oct/Nov?