Bullshit-free, or bullshit sufficiently cleverly coded to get past some people’s filters?
What’s the bullshit? A true fact is that an IPO’s valuation is determined by what people are willing to pay, and that’s what the CEO pretty much said.
Although I can’t read the whole article, because FUCK SIGNING INTO FACEBOOK OR TWITTER TO READ THE GODDAMN NEWS.
Well, one can argue that the stock price (which leads to the company’s valuation) is always too high by reference to auction theory. In a straight auction, the winner is willing to pay more than anyone else, so clearly he’s paying more than the consensus value.
But otherwise this CEO is talking straight and true.
By that argument, it’s impossible for a stock to ever be overvalued. It’s a content free sentence based on a willful misinterpretation. When people say that a stock is overvalued, they actually mean that the stock price presents an overabundance of exuberance on the behalf of investors, misconceptions over a business’s long term prospects, herd instinct, etc and so the stock like is likely to fall and fall rapidly once the initial phase is over.
Hmph. I wouldn’t even pay $1B for it. They took away my Glitch.
If I convince you to pay me a million dollars for bullshit, it says more about you than about the bullshit.
Yeah, he addresses that in the interview - he seems to believe it’s over-valued, too, and that the price will fall, but it will only fall “until they catch up to it.”
…which seems a little unrealistic to me. I mean, if the market’s over-exuberance can give you WAY TOO MUCH money, the market’s paranoia can give you WAY TOO LITTLE. If there’s only a vague, nebulous relationship between stock price and profitability (it shouldn’t shock anyone other than free-market fundies that this is the case), there’s no guarantee it’ll stop falling when it should.
The interview is pretty free of bullshit - he suggests that it’s probably true that people are giving his company extra money because they’re being a little freakin’ insane, but that, essentially, when someone’s trying to throw money at you, you can say “yes” and put it to use intelligently, even if they’re not spending it well.
The question of whether a stock company is overvalued is one to ask the investors, not the CEO. They are the ones who drove its price up. The CEO will only be able to provide BS answers.
I’m not charmed in any way and I don’t entirely agree with “bullshit-free”, because his comments kinda read like this to me:
...but there is also just a whole lot of supply and demand.Lots of money and people who want to give it away.
...and there’s only one Slack — and if you would like to invest in this Slack, this is the price that it costs.Supplies are limited. To one.
Interest rates being low...And because interest rates are low, we use our machine... Tick, tick, tick, :notes: **$2.8 Billion Dollars** Yay capitalism!
perhaps the permalink will be more accessible.
I wanted to give Slack my (company’s) money but they couldn’t successfully migrate our 10 year’s worth of Basecamp and Campfire data …
You’re ignoring the efficient-market hypothesis, namely if experts believe the stock is overvalued than they (or other experts) should be betting that way and bring the price back down. The fact they aren’t willing to do so suggests they either lack confidence in their evaluation, or they’re ignoring a large potential upswing which counterbalances the likely decline.
It doesn’t mean that the stock is priced correctly, it just means that no one really knows if it’s true value is lower or higher.
weak, strong or semi-strong?
While is answer is technically true–that things are technically worth what people are willing to pay, that applies to pretty much anything… such as art–and we all know there are works of art that are complete bullshit. But there’s always fools who want to believe bullshit can turn into diamonds. (And sometimes they do, in the case of Piero Manzoni–who turned managed to sell his shit as art at $181,374 for 61 cans of it lol)
Anyway, I digress… the answer might not be bullshit, but he cleverly just dodged a difficult question. If he had said, "yeah I think so because it’s got this this this and this… " For example an answer to that question for some companies, such as Whats App that sold for 19B, could be broken down to user base valuation with prospective growth in emerging markets, followed by net worth per capita, per user interaction, of projected marketing potential and advertising revenue. The fact that he answered that suggests he really doesn’t believe it’s worth that much, otherwise he would know the answer.
Heh. “Never give a sucker an even break”.
I think the thing about stock theoreticians, the secret about them, is in their name. In fact, they truly often are simply standard theory spouts. If they weren’t, they would be wiling away their hours driving enormous boats in sunny seas, not theorising about what amounts to selling tomatoes.
The greatest trick the stockbrokers ever pulled is the perpetuation of the idea that when you buy a stock, you’re buying something. It’s like money. Hey … wait a minute there!
Is this stock overvalued?