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5% is not earnings, it's revenue. A tiny fraction of that will be earnings. Hence a problem with the valuation. Assuming they have 10% margins - that means s
by alexasmyths 9y ago
5% is not earnings, it's revenue.
A tiny fraction of that will be earnings.
Hence a problem with the valuation.
Assuming they have 10% margins - that means sales of 10x what you described in order for the valuation to make sense.
Note that Twitter and many others, have never even turned a profit, and are still billions away from breaking even.
- danmaz74 9y agoI would expect variable costs for Patreon to be very low, and this their margins to be way higher than 10%, especially if they continue growing.
- alexasmyths 9y agoThese companies usually end up spending a fortune on advertising and overhead. One would 'expect' Twitters 'costs' to be low as well, I mean, it's a very simple service, and 'infrastructure costs' are not huge for them. And yet - they still lose money. Taking on a huge amount of money is an easy way to start being inefficient. This is looking like an 'Etsy' story.