GDP shock: Venture Capital's government bailout begins • Hacker News Board

Re: GDP shock: Venture Capital's government bailout begins

#21

Post by amarcheschi » Thu, Mar 06, 2025, 9:16 PM UTC

unsnap_biceps wrote: post #15

amarcheschi wrote: post #7

Earlier quoted context omitted.

I'm not knowledgeable on this, could you tell me more about what it means about ebitbda used to claim profitability?

Presume for the sake of example, a satellite costs 100 million to build and place into orbit and needs to be replaced every 5 years. During the life span of the satellite, it makes 1 million per year, growing 10% per year. In a more typical accounting system, You would divide the cost of replacement by the lifespan and get that the satellite "costs" 20 million per year, but only earns 1 million the first year, leadin…

Jesus, it sounds similar to what Intel did a few years ago when they started doing something weird to lead to a lower depreciation expense

Re: GDP shock: Venture Capital's government bailout begins

#22

Post by amarcheschi » Thu, Mar 06, 2025, 9:57 PM UTC

blackeyeblitzar wrote: post #11

amarcheschi wrote: post #7

Earlier quoted context omitted.

I'm not knowledgeable on this, could you tell me more about what it means about ebitbda used to claim profitability?

EBITDA = Earnings before interest, taxes, depreciation and amortization Basically, it is a profit like number that tells you something about the core business, but it isn’t just the straight up raw profit number of having more cash than previously when all said and done. The person you’re responding to was claiming that they used this EBITDA number to claim they were profitable, when they really were not since presum…

Ok I got why it didn't make sense to use that metric

Re: GDP shock: Venture Capital's government bailout begins

#23

Post by bryanlarsen » Fri, Mar 07, 2025, 2:30 AM UTC

zevets wrote: post #6

andsoitis wrote: post #2

Unable to generate returns that attract private investment, they now seek capital that can't walk away The grift begins.

The grift began a while ago - when "startups" like SpaceX started using EBITBDA to claim profitability on starlink. But the depreciation costs of LEO are substantial, and starlink satellites have an empirical MTBF of ~5.5 years. And at a depreciation rate of 15-20%, that "D" term starts to get pretty expensive, pretty darn quick.

Starlink claims to be free cash flow positive, with is pretty much the opposite of using EBITDA to claim profitability. It's essentially a depreciation rate of 100%.

There are thousands of companies misusing EBITDA. Pick an example of a public company with open books doing so. Picking a private company with closed books is just weird.