It's ironic that we're having this conversation again in a thread about Snapchat's relationship to Facebook.
Facebook was "Worth" $92 billion when they IPOed and most people on HN lost their minds about how overvalued they were when the stock dipped on that first day:
Amazon IPOed in 1997.. they didn't "make money" for over a decade, and even then, it was a tiny return. In the mean time, they built a massive business that's worth more than $430 billion today. Whether or not a company is making money in the most recent quarter has very little to do with their prospects.
Yes. It reminds me of DHH's loud proclamation that Facebook was not worth $33B. He'd have gotten a great return if he'd just bought some of their stock at that price instead of this:
>"Oh, well, but maybe Facebook just needs to mature, you say. If we give them just a few more years, the profit fairy might drop by and sprinkle her billions all over Facebook and its shareholders. I call fat chance."
FB's trajectory after that point had a few step functions which had nothing to do with talent or execution (i.e. more predictable factors), but the remarkable mutual back scratching arrangement going on between governments and Facebook (and similar companies).
For example, I don't know how anyone in their right mind would have allowed the FB - WhatsApp acquisition to happen after seeing the price tag. I really doubt if anyone who understands technology still thinks this wasn't a sweetheart deal between the govt and FB.
The other step function is the US government's (and probably other governments) decision to simply look away on privacy issues as soon as they saw the huge benefits of having a tame populace unable to untether themselves from the top social networks (i.e. less stuff to monitor).
This is all the more bizarre when you notice how the privacy intrusion has basically moved to a stage where just about anything goes, and not one person is actually able to function in the economy without accepting a drastic reduction in privacy. By which I mean, it is only a matter of time when this is going to turn against the politicos who helped usher in this era. In fact, we are already seeing this in some cases. It seems like the people who are reaching the top positions in politics seem to be disgustingly shameless. The more regular, normal politician is unable to withstand/ignore the scrutiny of all the skeletons in their closet. While that may be a good thing (the scrutiny), the outcome where the most shameless person becomes the leader by default is not.
You are taking huge risks when trying to understand what manipulations governments around the world would resort to when trying to predict currency movements. You take a similar risk in predicting the trajectory of private companies which manage to acquire enormous quantities of data because you don't know what kind of mutual back scratching arrangements that is going to set up in the future.
This is a bad take. At least pretend to look at their financials if you're going to make this argument. I'll help:
Facebook has $30 billion in cash and essentially no debt. The equity value of $30 billion in cash is.. $30 billion. So it's clear that they're worth at least $30 billion. On top of that they're generating ~$4 billion / quarter in net income. The equity value of net income is roughly Net income x (1 - Tax Rate), so call it $3 billion/quarter. Discount as you'd like for them to be worthless someday, but in the mean time they have a ton of cash and are printing a ton of cash.
I bet if you run the numbers and assuming a decent growth rate, you'll come to a total market cap of ~$420 billion. Efficient markets and all that..
So the stock market is a seriously overpriced bubble that makes no sense and will blow up sooner or later as it already did before. Jeff Bezos wisely chose not to make profit to give back to shareholders but to reinvest in his company instead. How does this mean anything in the story of snapchat making a smart move by refusing to be bought out by facebook ?
Snapchat would have to lose ~90% of its value to make the Facebook buyout offer better than the IPO decision. Even during the GFC, the NYSE only lost 50% of its value.
Measuring Snapchat's decision to refuse a buy-out is simple: The investors, founders, and employees all have more money now than they would have had if they had sold. This will be completely confirmed in roughly 100 days (once the lock-up expires), as long as their stock price is above ~$2.50 on August 1st, they're vindicated.
You could make the analysis more complicated with opportunity cost calculations or assumptions about whether they would have received Facebook stock (which has appreciated a fair amount since the buyout offer) but those are all marginal concerns.
