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What's interesting to me are: - market cap - random layoffs - overstaffing - falling competence A lot of frictions build in there. I'm curious how it will

What's interesting to me are: - market cap - random layoffs - overstaffing - falling competence A lot of frictions build in there. I'm curious how it will play out. I tend to translate market cap for big companies into dollars per person. 8 billion people in the world, so Google expects $250 profit per human being in average to be accurately valued. That feels high, but what do I know?

Axsuul 2y ago
Market cap is not profit
- nabla9 2y ago
  Their P/E is 26. Same as Apple and Meta. Microsoft is 35.
modeless 2y ago
> Google expects $250 profit per human being in average to be accurately valued I don't think your calculation makes sense. You ignored the earnings multiple. Companies are valued at a multiple of yearly earnings. A reasonable multiple is 20, so divide 2 trillion by 20 first, then by 8 billion, and that's $12.50 per person per year. Their current revenues are already over $9 per person per year! Now consider that in addition to search Google owns the single most widely used consumer operating system and web browser, the largest video site, a growing cloud business, the only alternative to Nvidia silicon for AI that's been deployed at scale, and other stuff like Waymo that has the potential to be enormous (it seems like a winner take all market to me, where the winner essentially owns all ground transportation, and Waymo is in the lead by far), plus still the largest AI research program in the world (even if it has had trouble turning that into products so far).
- mlyle 2y ago
  Companies’ intrinsic value is the present value of the future cash flows they’ll generate. One way to guess at this is some multiple of current earnings based on what you think growth possibilities and risks are.
  - awinter-py 2y ago
    google's revenue is 300b, the mayan calendar ends in 6 years, do the math + that's about 2 trillion
- grobbyy 2y ago
  I never said yearly. I said total profits. If you want to be technical about it, sum of discounted future profits. People in this thread are also confusing revenue, gross income, and net income. People in this thread are also giving other companies, but those may be overvalued as well. Companies have a finite (if long) lifespan. If market cap is more than total discounted future income, it's overvalued. If it's less, it's undervalued. It's just a question of when the market corrects.
  - modeless 2y ago
    You didn't say "total profits", you said "profit" which in the context of business financials is traditionally measured quarterly or yearly. Anyway, as I pointed out, they already make $9 per person on Earth per year. If they make that for 20 years without growing at all, that's $180 per person which isn't too far off from your $250. Of course you'll say that's unlikely, to which I agree. Their revenue is currently growing, which I think will continue for a few years at least. It will likely fall someday, but even in that case I think it's not unlikely that they could make your $250 per person in profit before that. And they could make much more in a bull case where they figure out how to leverage their AI stuff. Of course it's also possible that growth stalls next year, the stock tanks and the company goes under in short order. If you believe that then short the stock, you stand to make a fortune.
    - grobbyy 2y ago
      If I had infinite dollars and an infinite lifespan, I would. As is, my wallet isn't likely to be able to keep to with an irrational market, and my risk tolerance curve is very conservative. Unless I hit jackpot, mo shorts for me (in general, not just Google)!
Keyframe 2y ago
there are ~300-350m companies in the world also.
pcthrowaway 2y ago
No idea how this translates to profit, but they're probably extracting revenue from a billion people at this point. I spend something like $150/year on youtube premium + music subscriptions, have spent probably a lifetime total of $300 on media content, and since I use their products a lot I'd guess advertisers are paying them more than $10-20/year for my eyeballs. I may be ahead of 7.6-7.8 billion people in terms of the total lifetime amount I'll end up funding Google's funnel, but of the portion that spends more than me there's room to spend a lot more (and you're forgetting about people who haven't been born yet who will also be paying money to google one day) Market cap isn't really an estimation on how much money the company might make anyway, since Google doesn't pay it's shareholders dividends. It's just a way for people to speculate on how much a thing will be worth in the future. In theory there should be some relationship with current profits, but... did you take a look at Tesla any time in the last couple of years?
- scarmig 2y ago
  > Google doesn't pay it's shareholders dividends Google just started paying a dividend.

Axsuul 2y ago

Market cap is not profit

nabla9 2y ago
Their P/E is 26. Same as Apple and Meta. Microsoft is 35.

modeless 2y ago

> Google expects $250 profit per human being in average to be accurately valued I don't think your calculation makes sense. You ignored the earnings multiple. Companies are valued at a multiple of yearly earnings. A reasonable multiple is 20, so divide 2 trillion by 20 first, then by 8 billion, and that's $12.50 per person per year. Their current revenues are already over $9 per person per year! Now consider that in addition to search Google owns the single most widely used consumer operating system and web browser, the largest video site, a growing cloud business, the only alternative to Nvidia silicon for AI that's been deployed at scale, and other stuff like Waymo that has the potential to be enormous (it seems like a winner take all market to me, where the winner essentially owns all ground transportation, and Waymo is in the lead by far), plus still the largest AI research program in the world (even if it has had trouble turning that into products so far).

mlyle 2y ago
Companies’ intrinsic value is the present value of the future cash flows they’ll generate. One way to guess at this is some multiple of current earnings based on what you think growth possibilities and risks are.
- awinter-py 2y ago
  google's revenue is 300b, the mayan calendar ends in 6 years, do the math + that's about 2 trillion
grobbyy 2y ago
I never said yearly. I said total profits. If you want to be technical about it, sum of discounted future profits. People in this thread are also confusing revenue, gross income, and net income. People in this thread are also giving other companies, but those may be overvalued as well. Companies have a finite (if long) lifespan. If market cap is more than total discounted future income, it's overvalued. If it's less, it's undervalued. It's just a question of when the market corrects.
- modeless 2y ago
  You didn't say "total profits", you said "profit" which in the context of business financials is traditionally measured quarterly or yearly. Anyway, as I pointed out, they already make $9 per person on Earth per year. If they make that for 20 years without growing at all, that's $180 per person which isn't too far off from your $250. Of course you'll say that's unlikely, to which I agree. Their revenue is currently growing, which I think will continue for a few years at least. It will likely fall someday, but even in that case I think it's not unlikely that they could make your $250 per person in profit before that. And they could make much more in a bull case where they figure out how to leverage their AI stuff. Of course it's also possible that growth stalls next year, the stock tanks and the company goes under in short order. If you believe that then short the stock, you stand to make a fortune.
  - grobbyy 2y ago
    If I had infinite dollars and an infinite lifespan, I would. As is, my wallet isn't likely to be able to keep to with an irrational market, and my risk tolerance curve is very conservative. Unless I hit jackpot, mo shorts for me (in general, not just Google)!

Keyframe 2y ago

there are ~300-350m companies in the world also.

pcthrowaway 2y ago

No idea how this translates to profit, but they're probably extracting revenue from a billion people at this point. I spend something like $150/year on youtube premium + music subscriptions, have spent probably a lifetime total of $300 on media content, and since I use their products a lot I'd guess advertisers are paying them more than $10-20/year for my eyeballs. I may be ahead of 7.6-7.8 billion people in terms of the total lifetime amount I'll end up funding Google's funnel, but of the portion that spends more than me there's room to spend a lot more (and you're forgetting about people who haven't been born yet who will also be paying money to google one day) Market cap isn't really an estimation on how much money the company might make anyway, since Google doesn't pay it's shareholders dividends. It's just a way for people to speculate on how much a thing will be worth in the future. In theory there should be some relationship with current profits, but... did you take a look at Tesla any time in the last couple of years?

scarmig 2y ago
> Google doesn't pay it's shareholders dividends Google just started paying a dividend.