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I'd say (without much knowledge of SpaceX's financials) that it probably shouldn't be valued any higher. I'd argue it's fallacious to compare with WhatsApp beca

by a1a 12y ago

I'd say (without much knowledge of SpaceX's financials) that it probably shouldn't be valued any higher. I'd argue it's fallacious to compare with WhatsApp because it's obviously overvalued. Adding some perspective: Ferrari enterprise value: $6.03bn Heineken enterprise value: $11.857bn American Airlines enterprise value: $10.666bn KFC enterprise value: $19.492bn Audi enterprise value: $17.731bn Clean water for the entire planet: $10bn Top 50 college football programs: $15bn World's music industry: $16bn Mozambique's GDP: $18.9bn Sources: http://www.thedrum.com/news/2014/02/20/19-brands-facebook-could-have-bought-19bn-instead-whatsapp http://www.thedrum.com/news/2014/02/20/19-brands-facebook-co... http://list25.com/25-things-facebook-could-buy-with-19-billion-instead-of-whatsapp/ http://list25.com/25-things-facebook-could-buy-with-19-billi... http://www.telegraph.co.uk/technology/facebook/10652397/Facebook-buys-WhatsApp-but-what-could-it-have-spent-the-money-on-instead.html http://www.telegraph.co.uk/technology/facebook/10652397/Face...

jacquesm 12y ago
I get most of those except for the college football programs. But I do see why for others there is value there, bread, beer and entertainment (or, as it was in the old days, bread & circuses) have been able to capture very large audiences for millennia. (And the Music Industry and Heineken are reprentatives of the same category.)
- igravious 12y ago
  It is my opinion that it is generally fallacious to compare Market Cap with GDP. Why? Cuz GDP is a measure of economic output (throughput, generally per annum) whereas Market Cap is a measure of worth at a moment in time. The units don't match up but since they are frequently omitted we get unlike things being compared. What do you reckon?
  - roymurdock 12y ago
    Agreed - GDP is a historical record of a year's worth of activity. Therefore GDP more accurately corresponds to a company's net revenue - a net of what the country produced/consumed/spent/imported/exported/invested over a year. Market cap takes future earnings and total value into account. There is no such calculation for countries, but a country's "Market Cap" (potential) should, in most cases, be higher than its "Net Revenues.
    - jacquesm 12y ago
      There is actually. When a country issues bonds you can see some of the future value of the country's output reflected in the interest rate they can get their loans at.
    - exelius 12y ago
      There is such a metric - it's called national wealth [1] and it functions much like market cap on a national level. The mechanisms are different as countries can't be "valued" because they can't be bought and as such have no market price. Regardless, economic health is taken into account because the underlying asset values ARE calculated based on market price. National wealth is largely seen as an indicator of ability to pay off debt because it provides a tax base. As an example, the national wealth of the US in 2014 was $81.8 trillion, while our GDP in 2013 was $15 trillion. So your intuition is correct; GDP is a horrible way to value a country. Though in practice, GDP tends not to vary a lot in mature economies (i.e. inflation tends to stay roughly the same year to year), so you can do a relatively simple NPV calculation on the GDP to approximate the national wealth. [1] http://en.wikipedia.org/wiki/National_wealth http://en.wikipedia.org/wiki/National_wealth
exelius 12y ago
Erm, your sourced numbers are off. I think the article you're quoting is specifically looking at brand value, not enterprise value: Heineken enterprise value: $57bn [1] American Airlines enterprise value: $36bn [2] Yum Brands (KFC parent company) enterprise value: $37bn [3] Audi looks to be about right, and Ferrari is still a private company so their EV is a bit harder to quantify. The rest of your numbers are also harder to quantify; so I won't take issue with them. I agree with you that it's fallacious to compare SpaceX to WhatsApp because the vast majority of WhatsApp's valuation comes from the terminal value. Given that WhatsApp was purchased largely with Facebook stock (which also derives its high price from a large terminal value) I would say this is a case where Facebook basically paid for WhatsApp in "Facebook bucks", not actual US dollars. Since Facebook and WhatsApp are in largely uncharted economic territory, there is a large degree of potential error in the terminal value. SpaceX, meanwhile, is in an industry that existed prior to 10 years ago, and is thus a lot easier to accurately peg a terminal value to. Additionally, SpaceX requires a significant amount of capital investment to grow and perform additional research, while WhatsApp can scale enormously with very little capital needs. [1] http://ycharts.com/companies/HEINY/enterprise_value http://ycharts.com/companies/HEINY/enterprise_value [2] http://ycharts.com/companies/AAL/enterprise_value http://ycharts.com/companies/AAL/enterprise_value [3] http://ycharts.com/companies/YUM/enterprise_value http://ycharts.com/companies/YUM/enterprise_value
deleted 12y ago
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dirtyaura 12y ago
Is WhatsApp overvalued? Mark Zuckerberg made the decision of WhatsApp deal. In this planet he probably has the best visibility on revenue opportunities of mobile social networks. Facebook market cap is around 190 billion as of writing, and they have +1B monthly actives. WhatsApp had around 400M monthly actives when the deal was announced. If Facebook can implement ad model to WhatsApp as succesfully as it has implemented it to Facebook mobile app, it is totally possible that WhatsApp $19B deal was fairly valued. Maybe a bit overvalued as a defensive move, but not out of proportion.
- seanflyon 12y ago
  I think that both WhatsApp and Facebook are significantly overvalued, but some very smart people not only disagree with me, but also put their money where their mouth is.
bane 12y ago
For fun, WhatsApp was acquired for what, $16b? With 400m users? Or $40 per user. Even if the user base continued to grow to 1/7th of all humans on the planet, that's still $16 per user. Over 5 years that's about $3.2 per user per year. Can they monetize that much? Their fee is $1/year with the first year free. So assuming a billion people use it, it would take 17 years to get their money back in gross revenue terms. Who knows how long in net revenue. FB has a little over a billion users, and makes about $6 per user per year in gross revenue with tons of advertising. Is WhatApp overvalued? A little.

by a1a 12y ago

jacquesm 12y ago

I get most of those except for the college football programs. But I do see why for others there is value there, bread, beer and entertainment (or, as it was in the old days, bread & circuses) have been able to capture very large audiences for millennia. (And the Music Industry and Heineken are reprentatives of the same category.)

igravious 12y ago
It is my opinion that it is generally fallacious to compare Market Cap with GDP. Why? Cuz GDP is a measure of economic output (throughput, generally per annum) whereas Market Cap is a measure of worth at a moment in time. The units don't match up but since they are frequently omitted we get unlike things being compared. What do you reckon?
- roymurdock 12y ago
  Agreed - GDP is a historical record of a year's worth of activity. Therefore GDP more accurately corresponds to a company's net revenue - a net of what the country produced/consumed/spent/imported/exported/invested over a year. Market cap takes future earnings and total value into account. There is no such calculation for countries, but a country's "Market Cap" (potential) should, in most cases, be higher than its "Net Revenues.
  - jacquesm 12y ago
    There is actually. When a country issues bonds you can see some of the future value of the country's output reflected in the interest rate they can get their loans at.
  - exelius 12y ago
    There is such a metric - it's called national wealth [1] and it functions much like market cap on a national level. The mechanisms are different as countries can't be "valued" because they can't be bought and as such have no market price. Regardless, economic health is taken into account because the underlying asset values ARE calculated based on market price. National wealth is largely seen as an indicator of ability to pay off debt because it provides a tax base. As an example, the national wealth of the US in 2014 was $81.8 trillion, while our GDP in 2013 was $15 trillion. So your intuition is correct; GDP is a horrible way to value a country. Though in practice, GDP tends not to vary a lot in mature economies (i.e. inflation tends to stay roughly the same year to year), so you can do a relatively simple NPV calculation on the GDP to approximate the national wealth. [1] http://en.wikipedia.org/wiki/National_wealth http://en.wikipedia.org/wiki/National_wealth

exelius 12y ago

Erm, your sourced numbers are off. I think the article you're quoting is specifically looking at brand value, not enterprise value: Heineken enterprise value: $57bn [1] American Airlines enterprise value: $36bn [2] Yum Brands (KFC parent company) enterprise value: $37bn [3] Audi looks to be about right, and Ferrari is still a private company so their EV is a bit harder to quantify. The rest of your numbers are also harder to quantify; so I won't take issue with them. I agree with you that it's fallacious to compare SpaceX to WhatsApp because the vast majority of WhatsApp's valuation comes from the terminal value. Given that WhatsApp was purchased largely with Facebook stock (which also derives its high price from a large terminal value) I would say this is a case where Facebook basically paid for WhatsApp in "Facebook bucks", not actual US dollars. Since Facebook and WhatsApp are in largely uncharted economic territory, there is a large degree of potential error in the terminal value. SpaceX, meanwhile, is in an industry that existed prior to 10 years ago, and is thus a lot easier to accurately peg a terminal value to. Additionally, SpaceX requires a significant amount of capital investment to grow and perform additional research, while WhatsApp can scale enormously with very little capital needs. [1] http://ycharts.com/companies/HEINY/enterprise_value http://ycharts.com/companies/HEINY/enterprise_value [2] http://ycharts.com/companies/AAL/enterprise_value http://ycharts.com/companies/AAL/enterprise_value [3] http://ycharts.com/companies/YUM/enterprise_value http://ycharts.com/companies/YUM/enterprise_value

deleted 12y ago

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dirtyaura 12y ago

Is WhatsApp overvalued? Mark Zuckerberg made the decision of WhatsApp deal. In this planet he probably has the best visibility on revenue opportunities of mobile social networks. Facebook market cap is around 190 billion as of writing, and they have +1B monthly actives. WhatsApp had around 400M monthly actives when the deal was announced. If Facebook can implement ad model to WhatsApp as succesfully as it has implemented it to Facebook mobile app, it is totally possible that WhatsApp $19B deal was fairly valued. Maybe a bit overvalued as a defensive move, but not out of proportion.

seanflyon 12y ago
I think that both WhatsApp and Facebook are significantly overvalued, but some very smart people not only disagree with me, but also put their money where their mouth is.

bane 12y ago

For fun, WhatsApp was acquired for what, $16b? With 400m users? Or $40 per user. Even if the user base continued to grow to 1/7th of all humans on the planet, that's still $16 per user. Over 5 years that's about $3.2 per user per year. Can they monetize that much? Their fee is $1/year with the first year free. So assuming a billion people use it, it would take 17 years to get their money back in gross revenue terms. Who knows how long in net revenue. FB has a little over a billion users, and makes about $6 per user per year in gross revenue with tons of advertising. Is WhatApp overvalued? A little.