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That’s not actually true. A certain real estate leasing firm could give away the first year on a three year commitment to book the revenue at a very high COGS,
by pmart123 7y ago
That’s not actually true. A certain real estate leasing firm could give away the first year on a three year commitment to book the revenue at a very high COGS, allowing for unsustainable revenue growth. The internet 1.0 had many great examples of this.
- bduerst 7y agoTrue, but I didn't mean to say revenue was completely immune to the same manipulation - Microsoft was notorious for deferring windows revenue to show QoQ growth stability in the 90's, like you're eluding to. Still, there are fewer levers to manipulate revenue than profits, and I'd have more faith in that for AirBnB than profits.
- pmart123 7y agoWell, I think in We's case, they are pulling revenue which should be deferred forward, but like the Dotcom companies, you can also grow revenue by selling $2 for $1, which shows up when your losses are growing more/close to your revenue growth. As you mentioned, net income can easily be massaged, adjusted EBITDA, etc. Cash flow is harder to fake. Airbnb should have decent to good unit economics though.