"Amazon added 427,300 employees between January and October, pushing its work force to more than 1.2 million people globally, up more than 50 percent from a year ago. Its number of workers now approaches the entire population of Dallas." nytimes.com/2020/11/27/tec…
2/ Michael Mauboussin writing about "real options" in 1999:
"Amazon started by selling books. So there was a DCF value for the book business plus out-of-the-money contingent options on other offerings." capatcolumbia.com/Articles/FoFin…
"Amazon started by selling books. So there was a DCF value for the book business plus out-of-the-money contingent options on other offerings." capatcolumbia.com/Articles/FoFin…
3/ "As the book business proved successful, contingent options on music and video went from out- of-the-money to in-the-money... As time passed Amazon’s real options portfolio has become more valuable. For example, the foray into the auction business [was once] unimaginable...."
4/ What businesses in 2020 can you identify that are are like Amazon was in 1999 and are being valued by markets like Michael Mauboussin wrote in his essay:
"So there was a DCF value for the [existing] business plus out-of-the-money contingent options on other offerings."
"So there was a DCF value for the [existing] business plus out-of-the-money contingent options on other offerings."
5/ If SpaceX isn't being valued based on its existing rocket launch business plus out-of-the-money contingent options on other offerings like broadband satellite service, then how exactly is it being valued?
"The latest round brings SpaceX's equity value to $46 billion."
"The latest round brings SpaceX's equity value to $46 billion."
6/ What's another example of a real option based valuation?
"While SpaceX's annual launch revenue is estimated at about $2B, Musk sees that topping out at $3B in the coming years. But Starlink he said could bring in revenue of "more like $30B a year." google.com/amp/s/www.cnbc…
"While SpaceX's annual launch revenue is estimated at about $2B, Musk sees that topping out at $3B in the coming years. But Starlink he said could bring in revenue of "more like $30B a year." google.com/amp/s/www.cnbc…
7/ The rumored next round valuation of Stripe is as high as $100M according to Bloomberg. bloomberg.com/news/articles/…
How much of this valuation is for the existing businesses and how much is for "out-of-the-money contingent options on other businesses" as Mauboussin wrote in 1999?
How much of this valuation is for the existing businesses and how much is for "out-of-the-money contingent options on other businesses" as Mauboussin wrote in 1999?
Whoops- that's $100 billion not $100 million. "A billion here, a billion there, and pretty soon you're talking real money."
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