4 ms·

isn't it slightly high for ARM? what is fair value for them?

wredue 3y ago
Tech valuations are all fairies and unicorns right now. I don’t know what their “actual fundamentals” valuation should be, but actual fundamentals haven’t dictated tech stock pricing for at least a decade.
- ShroudedNight 3y ago
  I thought the substantial increase in interest rates mostly pissed away the fairies and unicorns, and people needed to prove they made real money now.
  - wredue 3y ago
    NVDA is up 200% YTD and was already massively overvalued at the start of the year. Others do seem to be backing off, but there is still definitely a lot of way overvalued tech out there.
    - linuxftw 3y ago
      NVDA forward PE is 42.48, which isn't super crazy relative to other big tech companies (MSFT over 30). I suspect ARM's forward PE is double that ratio (>80). If NVDA's forward projections are correct, and they can maintain that same growth, then there is still room for upside. Personally, I'm not playing this game of musical chairs because I don't think these valuations are sustainable, but as they say, the market can stay irrational longer than you can stay solvent, so shorting is a terrible idea.
      - wredue 3y ago
        Pricing stocks today at what a company might be worth in 10 years is pretty much fairies and unicorns. Other sectors do not price in the way tech does.
- sapiogram 3y ago
  Anyone who is able to reliably predict which stock valuations are actually fairies and unicorns can become insanely rich doing so. With this great insight, surely you'll be a billionaire in 10 years through short selling?
ta988 3y ago
I heard that's what market exchanges are supposed to be doing. /s
robertlagrant 3y ago
Can you define fair?
- ravenstine 3y ago
  You can't. Valuations are based on opinion and feelings.
  - lotsofpulp 3y ago
    You can certainly try to define it. https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards/english/2021/issued/part-a/ifrs-13-fair-value-measurement.pdf https://www.ifrs.org/content/dam/ifrs/publications/pdf-stand...
    - robertlagrant 3y ago
      Hah - you got me for a second! But of course, from the doc: > Fair value is a market-based measurement, not an entity-specific measurement. For some assets and liabilities, observable market transactions or market information might be available. For other assets and liabilities, observable market transactions and market information might not be available. However, the objective of a fair value measurement in both cases is the same—to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions (ie an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).
psychlops 3y ago
Have you seen Nvidia's stock price?
- 01100011 3y ago
  Irrelevant given they have completely different business models.
  - xorcist 3y ago
    This is literally how ARM is being sold by stock analysts. It is supposedly the "primary competitor" to nVidia in "AI".
    - relativ575 3y ago
      That's new to me. Who are those analysts?
      - xorcist 3y ago
        In trade magazines but also Squawk Box. It can be debated how serious that is but investors, perhaps especially retail, tends to listen to them.

Tech valuations are all fairies and unicorns right now. I don’t know what their “actual fundamentals” valuation should be, but actual fundamentals haven’t dictated tech stock pricing for at least a decade.

ShroudedNight 3y ago
I thought the substantial increase in interest rates mostly pissed away the fairies and unicorns, and people needed to prove they made real money now.
- wredue 3y ago
  NVDA is up 200% YTD and was already massively overvalued at the start of the year. Others do seem to be backing off, but there is still definitely a lot of way overvalued tech out there.
  - linuxftw 3y ago
    NVDA forward PE is 42.48, which isn't super crazy relative to other big tech companies (MSFT over 30). I suspect ARM's forward PE is double that ratio (>80). If NVDA's forward projections are correct, and they can maintain that same growth, then there is still room for upside. Personally, I'm not playing this game of musical chairs because I don't think these valuations are sustainable, but as they say, the market can stay irrational longer than you can stay solvent, so shorting is a terrible idea.
    - wredue 3y ago
      Pricing stocks today at what a company might be worth in 10 years is pretty much fairies and unicorns. Other sectors do not price in the way tech does.
sapiogram 3y ago
Anyone who is able to reliably predict which stock valuations are actually fairies and unicorns can become insanely rich doing so. With this great insight, surely you'll be a billionaire in 10 years through short selling?

ta988 3y ago

I heard that's what market exchanges are supposed to be doing. /s

robertlagrant 3y ago

Can you define fair?

ravenstine 3y ago
You can't. Valuations are based on opinion and feelings.
- lotsofpulp 3y ago
  You can certainly try to define it. https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards/english/2021/issued/part-a/ifrs-13-fair-value-measurement.pdf https://www.ifrs.org/content/dam/ifrs/publications/pdf-stand...
  - robertlagrant 3y ago
    Hah - you got me for a second! But of course, from the doc: > Fair value is a market-based measurement, not an entity-specific measurement. For some assets and liabilities, observable market transactions or market information might be available. For other assets and liabilities, observable market transactions and market information might not be available. However, the objective of a fair value measurement in both cases is the same—to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions (ie an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).

psychlops 3y ago

Have you seen Nvidia's stock price?

01100011 3y ago
Irrelevant given they have completely different business models.
- xorcist 3y ago
  This is literally how ARM is being sold by stock analysts. It is supposedly the "primary competitor" to nVidia in "AI".
  - relativ575 3y ago
    That's new to me. Who are those analysts?
    - xorcist 3y ago
      In trade magazines but also Squawk Box. It can be debated how serious that is but investors, perhaps especially retail, tends to listen to them.