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Private market valuations are funky and hard to reason about. In the public markets, valuation represents the current equilibrium of supply and demand - very ro
by highfrequency 2y ago
Private market valuations are funky and hard to reason about. In the public markets, valuation represents the current equilibrium of supply and demand - very roughly an average of a large number of opinions.
In private markets, especially with the recent trend of selling a tiny portion of the company at a massive price, the valuation represents something much closer to the maximum that any investor in the world thinks the company is valued at.
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- ramraj07 2y agoGiven the current valuation of Tesla, it doesn't look very different from private market valuations. If anything private valuations seem more sane than the public market to me.
- onlyrealcuzzo 2y agoEspecially when BARTERING a tiny portion of the company for resources from another company - that massively benefits a growth area. Amazon can "buy" $2B worth of Anthropic to guarantee $2B of spending on AWS - to report that as growth under AWS in their earnings - to juice their stock price. They also get to report that their investment in the previous round is up massively.
- JumpCrisscross 2y ago> the valuation represents something much closer to the maximum that any investor in the world thinks the company is valued at This is all before accounting for the preference stack, which makes multiplying a Series F per-share price (itself derived from dividing compute time by some magic number) by employee common stock a bit silly.
- boulos 2y agoI doubt their preferences are >1x since they've always had high demand. In that case, the preference stack would just be the total raised over time (~$10B).
- JumpCrisscross 2y ago> doubt their preferences are >1x That’s still something, especially right at the money! Some series also have various blocking, dividend and other rights.