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Post by Tim on Apr 3, 2018 11:35:18 GMT
I see that Spotify is floating itself on the US stock market today with an anticipated valuation of $23 Billion. That's for a company that has NEVER made a profit and is launching at a point where tech companies are facing a bit of an investor and consumer backlash.
It's as daft, to me, as Tesla being worth $55 Billion, more than Ford, despite only producing 100k cars last year and, again, having never made a profit. I know there is a thought that you're partly paying for innovation prospects but the longer things like electric cars exist the more competitors will come to market. That'll include the established car makers.
It's silly money.
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Post by Deleted on Apr 3, 2018 12:28:34 GMT
Agreed.
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Post by Big Blue on Apr 3, 2018 14:10:01 GMT
Indeed. How have they done the maths to get to that valuation? I can sort of see where the multiples of vehicle sales might give Tesla a big valuation but Spotify is fraught with the possibility of artistes and labels just pulling their product from Spotify.
Mind you the biggest profit I made last year was on a ramped share that is currently worth 10% of what I sold for last year after but had ballooned for no reason other than speculation. On that basis the stock market makes no sense whatsoever.
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Post by Bob Sacamano v2.0 on Apr 3, 2018 14:47:11 GMT
Is $23 billion too much? Spotify has 40% of the streaming market, worth some $3 billion, growth is strong, and we're really just scratching the surface of leveraging the revenue from additional income streams - concerts, merchandise etc. What Spotify and other streaming services need to do is develop original content a la Netflix to differentiate themselves from each other. For me, that's the challenge they face.
I've been sceptical about some of the prices tech firms have paid for acquisitions and I've been proved well wrong in the past. Similarly with IPOs.
(I've been watching Billions on Sky)
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Post by Tim on Apr 3, 2018 15:40:25 GMT
At $23 Billion the value is 8 times turnover then. Thinking back through figures from my career no business I can remember has been sold for anything like that. 8 times profit maybe but not turnover.
Spotify (and all the tech firms that are newish) are susceptible to competition who could be quick off the mark.
I presume that's what happened with Friends Reunited, Bebo and Myspace - they got overtaken by Facebook.
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Post by Deleted on Apr 3, 2018 16:20:46 GMT
Yet facefuk looks to be going down the rabbit hole too now. What is the next new big thing in pyramid business?
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