10 ms·

Not saying that 15Billion isn't ridiculous, but the formula is n't nearly as simple as value_per_user = valuation / num_users

• ghiotion 19y ago
  I hope this doesn't come out the wrong way, but why isn't it as simple as that? I'm sure the Enron accountants could come up with a better valuation model, but that doesn't necessarily make it so. It's a simplistic formula, but it seems reasonable enough to me.
  • sanj 19y ago
    Valuation is not the same thing as revenues per year. Or profit per year. an easy example: if facebook made 15B per year with 5B in profit, they could distribute dividends of the 5B each year to stockholders. In only 3 years, your original investment would be paid back and it would be all profit (to the investor) from that point on. Would you think that was a good deal? I would! So good that it'd get bid up on the open market way past 15B.