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We're in a serious bubble right now, IMHO. This valuation is based purely on the fact that all the other hip companies are using it, along with the fact that it

by ebbv 12y ago

We're in a serious bubble right now, IMHO. This valuation is based purely on the fact that all the other hip companies are using it, along with the fact that it is a good product. Valuations should be based on actual financials, but when it comes to tech right now they rarely are. Which is the definition of a bubble, IMHO.

dntrkv 12y ago
Valuations are also based on future potential (or lack thereof) as well. If a company is currently having a great quarter but there is news that might impact their next quarter, you can bet their stock will drop before their financials even take a hit. It works both ways. Obviously based on their current financials this valuation is absurd, but given how fast they have grown and how many companies have picked up their product, I would put my money on them justifying this valuation in the future.
jayhuang 12y ago
I feel similarly. Of course there are tons of people saying "no no no, it's not a bubble", but historically, bubbles were never acknowledged until they bursted.
- dntrkv 12y ago
  "but historically, bubbles were never acknowledged until they bursted." What does it mean when there are more people shouting bubble than those who deny it?
  - ebbv 12y ago
    That particular metric means nothing. People like me saying there's a bubble means basically nothing, because no VC is actually listening to my opinion. Just like most commenters on here saying there isn't also means nothing. But, there may (or may not) be a bubble going on despite this. Ultimately whether it is viewed as a bubble in 10 or 20 years depends entirely on whether enough investors get burned and burned big enough that they stop investing, just like what happened in the early 00's.
pbreit 12y ago
No, no, no. Startups valuations should NEVER be based on financials because startups should by definition have limited or no financials. The objective is to take investment in order to build assets which down the road have the potential to be valuable either on a financial profit basis or in aggregating attention.

by ebbv 12y ago

dntrkv 12y ago

Valuations are also based on future potential (or lack thereof) as well. If a company is currently having a great quarter but there is news that might impact their next quarter, you can bet their stock will drop before their financials even take a hit. It works both ways. Obviously based on their current financials this valuation is absurd, but given how fast they have grown and how many companies have picked up their product, I would put my money on them justifying this valuation in the future.

jayhuang 12y ago

I feel similarly. Of course there are tons of people saying "no no no, it's not a bubble", but historically, bubbles were never acknowledged until they bursted.

dntrkv 12y ago
"but historically, bubbles were never acknowledged until they bursted." What does it mean when there are more people shouting bubble than those who deny it?
- ebbv 12y ago
  That particular metric means nothing. People like me saying there's a bubble means basically nothing, because no VC is actually listening to my opinion. Just like most commenters on here saying there isn't also means nothing. But, there may (or may not) be a bubble going on despite this. Ultimately whether it is viewed as a bubble in 10 or 20 years depends entirely on whether enough investors get burned and burned big enough that they stop investing, just like what happened in the early 00's.

pbreit 12y ago

No, no, no. Startups valuations should NEVER be based on financials because startups should by definition have limited or no financials. The objective is to take investment in order to build assets which down the road have the potential to be valuable either on a financial profit basis or in aggregating attention.