5 ms·

The fact that a public company doesn't have a working product just blows my mind.

by f6v 6y ago

ipnon 6y ago
This is the main difference between today's bull market and the Dotcom Bubble. Companies valued 100 P/E were the rule then. Today they're the exception.
- raesene9 6y ago
  Yeah you can't have a high P/E if you don't actually make a profit! AirBnB, Palantir, Snowflake, Uber, Doordash, Lots of 10's of billions in valuations, no actual profits yet.
  - IshKebab 6y ago
    They have revenue at least though, which wasn't really true of most of the dot-com failures.
    - TedShiller 6y ago
      Another important distinction is that a company like Airbnb could be profitable overnight if it wanted to. It is choosing not to.
      - raesene9 6y ago
        I've heard this statement made many times about start-ups. The problem is often that, in changing their economics to generate a profit, they could allow competitors to take all their market share. In the case of AirBnB with their $93b market cap to get a P/E of say 35, they would need to generate $2.6b in profit, so could they do that and not crater their market?
        TedShiller 6y ago
        You have a good point. Still, many other hyped internet companies couldn’t be profitable even if they wanted to.
    - raesene9 6y ago
      Ah I have this perfect revenue generating machine, guaranteed to be able to get infinite revenue, just need to find a VC for it... Here's the secret, you give me $1 and I give you $1.20 in return . rinse and repeat ad infititum
      - duskwuff 6y ago
        So... MoviePass? :)
  - shalmanese 6y ago
    The average person has a really poor idea of what profit means because they analogize between their personal finances and a company's finances. What profit means for a company is essentially: "Across my entire company, of all the things I could be doing, I couldn't find a single initiative that I believe will yield me a risk adjusted ROI that is greater than just leaving the money in a bank account." Growing companies shouldn't be making a profit because they should be limited by their ability to execute on attractive growth opportunities fast enough. Mature companies can make profits because they've reached the limits of their attractive growth and now can be focused on harvesting the rewards.
duskwuff 6y ago
You can thank the SPAC (Special Purpose Acquisition Company) process for that. Nikola basically bypassed all of the normal scrutiny that's associated with an IPO by merging with a placeholder company that had already gone public. It's a really shady practice, and Nikola is a perfect example of what's wrong with it.
- fossuser 6y ago
  Yeah - I don’t see how SPACs are anything more than a way to dump a losing company on the public. Supposedly it’s about giving founders certainty, but if the investors in the SPAC want to take the founder’s company public then they must think the price they’re giving them is under market. Best interpretation of this is founders not wanting to deal with the hassle of an IPO (or preferably DPO) and are willing to take that lower price to avoid the logistics (which doesn’t inspire much confidence in the founders for me). I suspect a lot these are just about grifting money from the public while passing off a dying company. Cashing out quickly for SPAC investors and founders. Nikola in particular is basically fraud and going to zero, just hard to know when. I think it’s too difficult to make money with a short position, this biases the market to support this kind of failed company longer than it should.
  - xiphias2 6y ago
    Galileo in HyperChange said that he called a broker just to know the price of borrowing Nikola shares, and they said that it's 200% APR if I recall correctly. It may have been direvtly after the merger though, I don't know the exact details.
    - CGZp9X9k 6y ago
      You can actually look this up! IBKR provides SLB (stock loan borrow) rates for users, and someone made a site to report this data. https://iborrowdesk.com/ https://iborrowdesk.com/
    - gregshap 6y ago
      Briefly over 800%! [https://iborrowdesk.com/report/NKLA https://iborrowdesk.com/report/NKLA]
pmcollins 6y ago
apparently this company’s product is its ability to extract money from unsuspecting investors. i feel bad for them but the world will be a little bit better when nkla (and their frivolous lawsuit against tesla) is gone.

The fact that a public company doesn't have a working product just blows my mind.

by f6v 6y ago

The fact that a public company doesn't have a working product just blows my mind.

This is the main difference between today's bull market and the Dotcom Bubble. Companies valued 100 P/E were the rule then. Today they're the exception.

raesene9 6y ago
Yeah you can't have a high P/E if you don't actually make a profit! AirBnB, Palantir, Snowflake, Uber, Doordash, Lots of 10's of billions in valuations, no actual profits yet.
- IshKebab 6y ago
  They have revenue at least though, which wasn't really true of most of the dot-com failures.
  - TedShiller 6y ago
    Another important distinction is that a company like Airbnb could be profitable overnight if it wanted to. It is choosing not to.
    - raesene9 6y ago
      I've heard this statement made many times about start-ups. The problem is often that, in changing their economics to generate a profit, they could allow competitors to take all their market share. In the case of AirBnB with their $93b market cap to get a P/E of say 35, they would need to generate $2.6b in profit, so could they do that and not crater their market?
      - TedShiller 6y ago
        You have a good point. Still, many other hyped internet companies couldn’t be profitable even if they wanted to.
  - raesene9 6y ago
    Ah I have this perfect revenue generating machine, guaranteed to be able to get infinite revenue, just need to find a VC for it... Here's the secret, you give me $1 and I give you $1.20 in return . rinse and repeat ad infititum
    - duskwuff 6y ago
      So... MoviePass? :)
- shalmanese 6y ago
  The average person has a really poor idea of what profit means because they analogize between their personal finances and a company's finances. What profit means for a company is essentially: "Across my entire company, of all the things I could be doing, I couldn't find a single initiative that I believe will yield me a risk adjusted ROI that is greater than just leaving the money in a bank account." Growing companies shouldn't be making a profit because they should be limited by their ability to execute on attractive growth opportunities fast enough. Mature companies can make profits because they've reached the limits of their attractive growth and now can be focused on harvesting the rewards.

duskwuff 6y ago

You can thank the SPAC (Special Purpose Acquisition Company) process for that. Nikola basically bypassed all of the normal scrutiny that's associated with an IPO by merging with a placeholder company that had already gone public. It's a really shady practice, and Nikola is a perfect example of what's wrong with it.

fossuser 6y ago
Yeah - I don’t see how SPACs are anything more than a way to dump a losing company on the public. Supposedly it’s about giving founders certainty, but if the investors in the SPAC want to take the founder’s company public then they must think the price they’re giving them is under market. Best interpretation of this is founders not wanting to deal with the hassle of an IPO (or preferably DPO) and are willing to take that lower price to avoid the logistics (which doesn’t inspire much confidence in the founders for me). I suspect a lot these are just about grifting money from the public while passing off a dying company. Cashing out quickly for SPAC investors and founders. Nikola in particular is basically fraud and going to zero, just hard to know when. I think it’s too difficult to make money with a short position, this biases the market to support this kind of failed company longer than it should.
- xiphias2 6y ago
  Galileo in HyperChange said that he called a broker just to know the price of borrowing Nikola shares, and they said that it's 200% APR if I recall correctly. It may have been direvtly after the merger though, I don't know the exact details.
  - CGZp9X9k 6y ago
    You can actually look this up! IBKR provides SLB (stock loan borrow) rates for users, and someone made a site to report this data. https://iborrowdesk.com/ https://iborrowdesk.com/
  - gregshap 6y ago
    Briefly over 800%! [https://iborrowdesk.com/report/NKLA https://iborrowdesk.com/report/NKLA]

pmcollins 6y ago

apparently this company’s product is its ability to extract money from unsuspecting investors. i feel bad for them but the world will be a little bit better when nkla (and their frivolous lawsuit against tesla) is gone.