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Facebook spurned a $2bn Acquisition offer from Yahoo. I'll say now about SnapChat what I said about Facebook at the time: They probably know something about t

Facebook spurned a $2bn Acquisition offer from Yahoo. I'll say now about SnapChat what I said about Facebook at the time: They probably know something about their market that we don't that leads them to credibly believe they're worth more than $x bn.

dopamean 13y ago
Or at least makes the comfortable gambling on it.
- thatthatis 13y ago
  The difference between a gamble and an investment is merely whether the NPV/Expected Value is negative or positive.
  - applecore 13y ago
    St. Petersburg lottery[1] has an infinite expected value, but it definitely is not an investment. No actual person would be willing to "invest" more than a very small amount into it. [1]: http://en.wikipedia.org/wiki/St._Petersburg_paradox http://en.wikipedia.org/wiki/St._Petersburg_paradox
    - thatthatis 13y ago
      1: there is a finite upper bound to the payoff, fixed at the amount the casino has, so calling the ev infinite ignores real constraints. 2: infinity is a valid concept on Mathematics, but not in economics. If there were infinity in economics there would be no constraints and no reason for the field of economics to exist. 3: by my definition, playing the st petersburg lottery is an investment up to the amount of of money the casino has on hand. I'd argue that it is further prudent to play if you're guaranteed a sufficient N and $x price such that your available disposable cash = ($x * N) leads to a positive value at least 50% of the time.
badman_ting 13y ago
And Groupon spurned a 6-billion dollar deal from Google. Maybe they know something, maybe they don't.
- jeremymims 13y ago
  Today, Groupon's market cap is $6.88 billion. So, maybe it would have been smart to sell, but as of today, they're ahead. I have a feeling that company wasn't quite the disaster you think it was.
  - minimaxir 13y ago
    That's really not ahead. http://en.wikipedia.org/wiki/Time_value_of_money http://en.wikipedia.org/wiki/Time_value_of_money
  - JumpCrisscross 13y ago
    Not so fast. On 1 December 2010 (around when Google bid $6 billion for Groupon) the 3-year Treasury traded at 0.84% - thus $6 billion in December 2010 was worth no less than $6.2 billion today. If you put $6 billion into the Russell 3000 index on 1 December 2010, on the other hand, it would be worth $8.7 billion (14% more) today. Given that Groupon is a high-beta mid-cap stock, I would expect this figure to be closer to a fair baseline than the prior one.
  - biot 13y ago
    Groupon raised "only" $700M from their IPO. Market cap != cash in the bank.
  - cylinder 13y ago
    Have to consider if they were offered Google shares or cash. If GOOG, look at the value of Google shares now vs then.
- thatthatis 13y ago
  Even if we cede that Groupon would have had a better IRR for investors had they sold for $6bn; A move does not have to be correct with final knowledge to be correct with present knowledge.

dopamean 13y ago

Or at least makes the comfortable gambling on it.

thatthatis 13y ago
The difference between a gamble and an investment is merely whether the NPV/Expected Value is negative or positive.
- applecore 13y ago
  St. Petersburg lottery[1] has an infinite expected value, but it definitely is not an investment. No actual person would be willing to "invest" more than a very small amount into it. [1]: http://en.wikipedia.org/wiki/St._Petersburg_paradox http://en.wikipedia.org/wiki/St._Petersburg_paradox
  - thatthatis 13y ago
    1: there is a finite upper bound to the payoff, fixed at the amount the casino has, so calling the ev infinite ignores real constraints. 2: infinity is a valid concept on Mathematics, but not in economics. If there were infinity in economics there would be no constraints and no reason for the field of economics to exist. 3: by my definition, playing the st petersburg lottery is an investment up to the amount of of money the casino has on hand. I'd argue that it is further prudent to play if you're guaranteed a sufficient N and $x price such that your available disposable cash = ($x * N) leads to a positive value at least 50% of the time.

badman_ting 13y ago

And Groupon spurned a 6-billion dollar deal from Google. Maybe they know something, maybe they don't.

jeremymims 13y ago
Today, Groupon's market cap is $6.88 billion. So, maybe it would have been smart to sell, but as of today, they're ahead. I have a feeling that company wasn't quite the disaster you think it was.
- minimaxir 13y ago
  That's really not ahead. http://en.wikipedia.org/wiki/Time_value_of_money http://en.wikipedia.org/wiki/Time_value_of_money
- JumpCrisscross 13y ago
  Not so fast. On 1 December 2010 (around when Google bid $6 billion for Groupon) the 3-year Treasury traded at 0.84% - thus $6 billion in December 2010 was worth no less than $6.2 billion today. If you put $6 billion into the Russell 3000 index on 1 December 2010, on the other hand, it would be worth $8.7 billion (14% more) today. Given that Groupon is a high-beta mid-cap stock, I would expect this figure to be closer to a fair baseline than the prior one.
- biot 13y ago
  Groupon raised "only" $700M from their IPO. Market cap != cash in the bank.
- cylinder 13y ago
  Have to consider if they were offered Google shares or cash. If GOOG, look at the value of Google shares now vs then.
thatthatis 13y ago
Even if we cede that Groupon would have had a better IRR for investors had they sold for $6bn; A move does not have to be correct with final knowledge to be correct with present knowledge.