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It gives you an idea of how much upside there is. If the stock is at $1/share, that tells you nothing. But is the valuation is $100 million and you think it c
by devoutsalsa 5y ago
It gives you an idea of how much upside there is. If the stock is at $1/share, that tells you nothing. But is the valuation is $100 million and you think it could go over $1 billion, that means your funny money could maybe 10x. If you think it’s a billion dollar company and the valuation of $2 billion, maybe your shares are inherently worthless.
- deleted 5y ago[deleted]
- listenallyall 5y agoWhile technically this is reasonable advice, it should be noted that what you think the correct valuation ought to be, is highly likely to be wildly incorrect and a poor basis upon which to make decisions.
- devoutsalsa 5y agoYou’re not wrong. It’s more like you have an opportunity to get inside information on a company when you are interviewing. If the company sounds like it’s just plodding along and they’re on a series Q down round, maybe that’s less valuable than a startup that is about to blow up in the good way with a still modest valuation. You probably can’t tell if something is a diamond or a polished turd, but sometimes you can smell an actual turd. All stock options are a lottery ticket, but maybe you can pick the lottery ticket with the best odds compared when comparing them to the other options.