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Totally, because the _expected future value_ changes with the new information. If they had actually created something of value, that wouldn't change because of
by luckylion 4y ago
Totally, because the _expected future value_ changes with the new information. If they had actually created something of value, that wouldn't change because of new information. But they hadn't, and yet their companies were worth billions.
"Provides value" is loosely connected to "expected future value", but it's certainly not the same thing.
- robertlagrant 4y agoI agree. Except creating something of value isn't the same as company value - company value should be derived from ability to make money at a certain rate while spending it at a certain rate. This does include what you say, but with some extra bits. But back to your point: it is possible to simulate either or both of those things and have eager investors get in early, but that's why they (probably) get in for less money than if the company had done what it claimed. They took a risk, and taking a risk is one of the valuable contributions one can make to a company.