4 ms·

> This time the money is largely coming from private equity and there's not a lot of splashy IPOs happening. This is an amusing statement in light of the fact

> This time the money is largely coming from private equity and there's not a lot of splashy IPOs happening. This is an amusing statement in light of the fact that the largest IPO in history (Alibaba) took place last week.

marcosdumay 12y ago
Compare to the 99's. One couldn't keep track of all the IPOs back then. Anyway, the VC bubble will not pop alone. It'll take stocks with it (or the other way around), and people will suffer worldwide again.
- 7Figures2Commas 12y ago
  > Compare to the 99's. One couldn't keep track of all the IPOs back then. There have been close to 200 IPOs this year. How many people here can, by memory alone, name more than 10? I'm not at all arguing that the IPO market of 2014 is the IPO market of 2000 reincarnated (it absolutely isn't), but anecdotal analyses that boil down to "it was crazier in 2000!" aren't very meaningful.
nmjohn 12y ago
I'll paraphrase a comment I wrote on reddit about this yesterday. Alibaba has a PE ratio one tenth of amazon - and is already a profitable company. This is the exact opposite of what a bubble is. This is not at all like the kind of IPOs leading to the 2000 crash.
- 7Figures2Commas 12y ago
  I didn't comment on Alibaba's financials. I simply responded to the statement that "there's not a lot of splashy IPOs happening," which I found somewhat amusing in light of the fact that the arguably "splashiest" IPO just took place. That said, Alibaba's profitability and PE ratio compared to Amazon is meaningless in the context of a bubble discussion. A bubble does not merely consist of unprofitable companies becoming ridiculously valued; it consists of profitable companies becoming more highly valued than their fundamentals can support. If Amazon's stock price fell by 25%, and Alibaba's did the same, as an Alibaba shareholder would you take comfort in the fact that Alibaba still has a PE ratio one tenth Amazon's? Of course not.
  - goodcanadian 12y ago
    If Amazon's stock price fell by 25%, and Alibaba's did the same, as an Alibaba shareholder would you take comfort in the fact that Alibaba still has a PE ratio one tenth Amazon's? Of course not. Actually, yes, I would take comfort in that fact. It would mean that Alibaba was far more likely to recover its value.
    - 7Figures2Commas 12y ago
      > It would mean that Alibaba was far more likely to recover its value. You seem to misunderstand what the PE ratio actually represents. As an experiment, I'd suggest you test your hypothesis against actual market data. Hint: you will have no problem finding stocks with higher than industry average PE ratios pre-2008 crash that have significantly outperformed their lower PE ratio counterparts since the market bottom in 2009.
luma 12y ago
This would in fact be amusing if "a lot" == "1".
dragonwriter 12y ago
Not sure why its amusing; the presence of fewer splashy IPOs means less competing alternatives for the money of those investors seeking splashy IPOs to sink money into. Insofar as "splashy" is mostly a factor of media attention in the runup, there being fewer splashy IPOs might itself contribute directly to the splashy IPOs that do exist being bigger (there's other contributors, too -- if the media isn't as prone to drive attention to every tech IPO, it means the IPOs that are splashy are likely splashy because of some fundamental newsworthy feature, which often includes things like strength in the fundamentals or the amount of money sought to be raised, that is, IPOs have to be set-up to be bigger to be splashy.)

marcosdumay 12y ago

Compare to the 99's. One couldn't keep track of all the IPOs back then. Anyway, the VC bubble will not pop alone. It'll take stocks with it (or the other way around), and people will suffer worldwide again.

7Figures2Commas 12y ago
> Compare to the 99's. One couldn't keep track of all the IPOs back then. There have been close to 200 IPOs this year. How many people here can, by memory alone, name more than 10? I'm not at all arguing that the IPO market of 2014 is the IPO market of 2000 reincarnated (it absolutely isn't), but anecdotal analyses that boil down to "it was crazier in 2000!" aren't very meaningful.

nmjohn 12y ago

I'll paraphrase a comment I wrote on reddit about this yesterday. Alibaba has a PE ratio one tenth of amazon - and is already a profitable company. This is the exact opposite of what a bubble is. This is not at all like the kind of IPOs leading to the 2000 crash.

7Figures2Commas 12y ago
I didn't comment on Alibaba's financials. I simply responded to the statement that "there's not a lot of splashy IPOs happening," which I found somewhat amusing in light of the fact that the arguably "splashiest" IPO just took place. That said, Alibaba's profitability and PE ratio compared to Amazon is meaningless in the context of a bubble discussion. A bubble does not merely consist of unprofitable companies becoming ridiculously valued; it consists of profitable companies becoming more highly valued than their fundamentals can support. If Amazon's stock price fell by 25%, and Alibaba's did the same, as an Alibaba shareholder would you take comfort in the fact that Alibaba still has a PE ratio one tenth Amazon's? Of course not.
- goodcanadian 12y ago
  If Amazon's stock price fell by 25%, and Alibaba's did the same, as an Alibaba shareholder would you take comfort in the fact that Alibaba still has a PE ratio one tenth Amazon's? Of course not. Actually, yes, I would take comfort in that fact. It would mean that Alibaba was far more likely to recover its value.
  - 7Figures2Commas 12y ago
    > It would mean that Alibaba was far more likely to recover its value. You seem to misunderstand what the PE ratio actually represents. As an experiment, I'd suggest you test your hypothesis against actual market data. Hint: you will have no problem finding stocks with higher than industry average PE ratios pre-2008 crash that have significantly outperformed their lower PE ratio counterparts since the market bottom in 2009.

luma 12y ago

This would in fact be amusing if "a lot" == "1".

dragonwriter 12y ago

Not sure why its amusing; the presence of fewer splashy IPOs means less competing alternatives for the money of those investors seeking splashy IPOs to sink money into. Insofar as "splashy" is mostly a factor of media attention in the runup, there being fewer splashy IPOs might itself contribute directly to the splashy IPOs that do exist being bigger (there's other contributors, too -- if the media isn't as prone to drive attention to every tech IPO, it means the IPOs that are splashy are likely splashy because of some fundamental newsworthy feature, which often includes things like strength in the fundamentals or the amount of money sought to be raised, that is, IPOs have to be set-up to be bigger to be splashy.)