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EDIT: "benmanns" pointed out the point of confusion. thanks! I don't think we're disagreeing. Sure they bought 2% not 100% of the company, but that's not real
by blah32497 13y ago
EDIT: "benmanns" pointed out the point of confusion. thanks!
I don't think we're disagreeing.
Sure they bought 2% not 100% of the company, but that's not really relevant. The $200M/yr they currently make is I assume profit - which is either payed out as dividends or invested back into the company. It's not really important which ones b/c the two are in the grand scheme of things equivalent. An investment increasing the worth of the company and therefore the worth of their share of it.
I feel like in the end it still represents an expectation of 2% growth...
- vasilipupkin 13y agoNo. The expectation of growth should be roughly similar to growth of similar tech companies. Typical return on equity of an S&P 500 company is about 15-16% per year, so investors should expect probably at least that much and more like twice that
- blah32497 13y agoWell why doesn't that square up with the valuation then? Did Dropbox lowball themselves?
- clarky07 13y agoNo. You don't pay 50x revenue for 2% growth. That is a huge valuation and it means they are expecting more like 50-100% growth for a few more years.