A 'cynic' is a man that knows the price of everything and the value of nothing.
While there are subtle differences between the cynics that Oscar Wilde was talking about and player-haters that seem to lurk around each corner these days, both apply to the current debate about company valuation. Don't get me wrong, anyone that lived through the Internet/Telecomm bubble crash will always carry a certain degree of skepticism when it comes to valuing hot new names in the sector. But then again, there's that infamous saying: "This time, it will be different."
But it is truly different in certain ways, including the fact that a lot of these private companies with sky-high valuations are making money- it's not about inflated values for a bunch of eyeballs.
Be that as it may, even great companies can have overvalued stocks. The thing to know is how one determines value. Here's the rub: lots of people have opinions and most are unqualified to judge, which makes this whole thing very interesting because those that do have the track records (and wads of cash) have been passing judgment and believe outrageous valuations are still to come.
The name in the eye of the valuation storm that continues to anger the curmudgeons, bears, and Wall Street investment bankers who have been shut out of its meteoric rise is Uber.
Uber's name (which means over, above or across) and the company have lived up to the hype and then some. A few weeks ago, this was a $10.0 billion company, then $12.0 billion, then $17.0 billion, and this week it starts out with a valuation of $18.2 billion.
What idiots are putting that kind of price tag on this company via its latest round of funding?
> Fidelity $425 million
> Wellington $209 million
> Black Rock $175 million
> Summit Partners
> Google Ventures
> Menlo Partner
I can't say what the real value of these companies are, but I can say that this is an exciting period of disruption that could change every day lives and shake up old school industries in a profound way. Since they are all funded by venture capitalists and located in California, the giants on Wall Street may have an ax to grind. It's an interesting debate, but as far as I'm concerned, has no bearing on valuations of publicly traded companies, even in the tech space.
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