3 ms·
Yes and since no one can accurately predict that, its valuation is based more on speculation, rather than what could be extrapolated from the numbers alone. Wh
by indigoabstract 2y ago
Yes and since no one can accurately predict that, its valuation is based more on speculation, rather than what could be extrapolated from the numbers alone.
Which is probably a bit counterintuitive for most people. At least for me it was.
- Breza 2y agoMatt Levine has a great newsletter where he regularly delves into questions like this. He recently wondered, somewhat seriously, if the era of valuing stocks based on fundamentals was a fad that's now over.
- lotsofpulp 2y agoAll valuation is based on speculation. “The numbers” are always subject to change.
- indigoabstract 2y agoI guess I was thinking about how a more regular/predictable business would usually be sold by its owners for a multiple of its yearly revenue, for example. Would the same apply to unicorns? Probably not, because they're special.
- lotsofpulp 2y agoBoth situations are still betting on future potential, either via earnings maintenance/growth, or via betting on being able to sell the equity at a higher price to a subsequent buyer.