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So if you bought the whole company at a $50b valuation, and assume that this $355m/yr profit rate for first 9 months held constant and therefore turned into $47
by mkramlich 16y ago
So if you bought the whole company at a $50b valuation, and assume that this $355m/yr profit rate for first 9 months held constant and therefore turned into $473m total by end of year, and then that rate held constant each year on forward, and that all profits were always and evenly distributed to all shareholders, then you'd recoup your investment (merely break even, anyway) after 105 years.
Add in an unpredictable future growth rate. Add in the fact that they're probably approaching a hard cap on users in the next year or so. Add in bubble-ishness. Add in a big unknown as to whether they find ways to better monetize their users. And all this adds up to telling me either this is a bad investment, or, maybe just maybe it will at least break even within your lifetime. Can't say. But from this data I think it is not clear that this is a slam dunk buy at all. Either bad or meh.
- JonnieCache 16y agoGoldman have a lot of other ways of profiting from this other than simply taking a share of FB margins. For a start, they get to be in charge of the entire IPO process. That alone will be very profitable for them. There was a bunch of other stuff like this discussed in the threads on the goldman investment itself.
- mkramlich 16y agoagreed. plus Goldman can profit on the Greater Fool effect. i was just assuming that, if you weren't Goldman, and weren't going to take advantage of the Greater Fool effect, etc., and you wanted to buy-and-hold rather than buy-and-flip, then, the numbers don't look too compelling at the $50bn valuation. but yeah, anything can happen, and there are lots of factors involve.
- bcrawl 16y agoor maybe, everyone is going to be worth $10 in a long run. 2bn users * $10, they have already made their money. And its a cheap assumption.