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This article explains why Snowflake is a great company. And there's no doubt about that. But it does not explain why it is valued at 60B$. Or if that value mak
by snird 6y ago
This article explains why Snowflake is a great company. And there's no doubt about that.
But it does not explain why it is valued at 60B$. Or if that value makes sense.
To put a price on a company, I need to know in projection for the next 5-10 years what income they will generate to shareholders.
The fact that they are a great company does not guarantee they will generate an income to shareholders that value them at 60B$.
This is how bubble starts. Overvalue a great company, then overvalue fair companies just not to miss out and "in comparison" with the great companies, and in the end, overvalue nothing (if Tesla is great, then Nikola was the nothing).
- Cthulhu_ 6y agoThat assumes the stock market is logical and rational, but you know it isn't. Stock prices are mostly independent from the underlying company's actions and performance, and instead vary depending on investors. The bigger investors have so much money and influence (e.g. operating multiple large 'financial news' / stock news websites) they can sway the prices wherever they want.
- inbx0 6y agoSo maybe the article should've been Why is Snowflake so Valuable? Stock market is not logical or rational. Thanks for reading.