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When someone says $300 million dollar company, it doesn't mean a company with $300 million dollars of revenue or profit per year. Generally, it means the valuat
by chunkbot 16y ago
When someone says $300 million dollar company, it doesn't mean a company with $300 million dollars of revenue or profit per year. Generally, it means the valuation (based on any number of measures, ie. acquisition price, last traded price x number of shares outstanding, founders pulling a figure out of thin air, etc.) of the company, so revenue can be anywhere from $0 to $300+ million (generally around single-digit multiples), and profit can even be negative.
- qq66 16y agoThe traditional meaning of an $x billion company is by revenues. Using it to mean valuation is quite new, and limited to startup/Silicon Valley people.
- endtime 16y agoI'm pretty sure Wall St. people also talk in terms of valuation.
- krohrbaugh 16y agoIn general, Wall St tends to use this nomenclature (i.e., $X billion dollar company) when referencing revenues. For instance, Procter & Gamble is referred to as an "$80 billion dollar company" - which speaks to revenue, not market cap. This gets murky with private firms, since revenue isn't typically shared, and even more so with startups where so much of the value is based on future, projected earnings. In general, though, I'd say the nomenclature more commonly refers to revenues and not 'valuation'.