5 ms·
I'm not commenting on the specific valuation, but I think you're looking at their valuation without probabilities priced in. A $30b valuation is a very rationa
by chadwittman 6y ago
I'm not commenting on the specific valuation, but I think you're looking at their valuation without probabilities priced in.
A $30b valuation is a very rational valuation if you assessed there was a 50% chance of a $0 valuation and a 50% chance of a $60b valuation.
- erichocean 6y ago"You should sink $30B into an investment that has a 50% chance of going to zero, that's very rational." — some HN commenter
- vikramkr 6y agoYes, it is rational, because of the other 50% chance. Welcome to finance. If you think a 50% chance of going to zero is bad, well, wait till you find out about some of the derivatives people trade. And hey, at least the value of this asset doesn't go below 0!
- erichocean 6y ago"Please go into finance." — Everyone else in the market
- vikramkr 6y agoWell, you'd also have to have 100% risk tolerance for that to make sense. Something like 50% chance of 0 and 50% chance of 100 billion might be more realistic for a binary outcome valuation like that.