41–49 of 49 posts
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Shorting excellent companies that make lots of money is generally a bad idea.
They made $3.7M last quarter. That's not "lots of money" for a $32B market cap.
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Mathematically, their price should go down exactly (due to this announcement) (1 - Old # of outstanding shares / New # of outstanding shares)%
Only if you think the money they're getting for selling the stock is worthless...
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They made $3.7M last quarter. That's not "lots of money" for a $32B market cap.
Those are gaap earnings which are of minor relevance for high growth companies prioritizing usage and revenue expansion. The company made $363 million in revenues last quarter.
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Saying the value of a biz model is inversely proportional to P/E is ridiculous.
Surely not - P/E ratio is a guess at future profits factored in now. If a company is demonstrating real profits now and so has a viable business model, it will be easier to guess (project?) future profit and so P/E ratio will lower I suspect this only works for P/E ratios above one order of magnitude - when dealing with companies that obey laws of gravity other factors come in to play (I mean seriously 900x earnings.…
It's the edge case of low P/E and low profits that indicates a non-valuable biz model.
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They made $3.7M last quarter. That's not "lots of money" for a $32B market cap.
Those are gaap earnings which are of minor relevance for high growth companies prioritizing usage and revenue expansion. The company made $363 million in revenues last quarter.
http://www.google.com/finance?q=NYSE%3ALNKD&fstype=ii
363M revenue. Minus a ton of things for operating income of 8M. Then tax brings it to 3.7M.
On what basis are we supposed to think LinkedIn is suddenly going to eliminate > $300M of quarterly costs?
If you do the "1 times revenue" (so about 1BN) that's still not close to being worth 32B.
I asked the same things when I was 18 in the dot-com boom and got hand-wavy responses and people talking about eyeballs and stuff. Why is this fundamentally different? I understand if it's too much to explain in a comment, but could you link to some introduction that explains why a company's costs should be ignored?
Also, why the stock would go up when they meet expectations? If you bought into the high P/E at $100 on the logic of "yeah the PE is high, but it's growing into it" then you'd expect the PE to lower as they meet their goals. Instead the PE stays around the same area and the stock goes up. That does not sound rational. Edit: Like, 1% profit margin, so even if they magically multiply that by 10 or 20 times, that'd still mean a PE in the hundreds.
At a P/E of 935, I would also sell all the shares I could. http://finance.yahoo.com/q?s=LNKD
Absolutely. When choosing between network effects vs. data, I will invest in a data company every time. Data seems to pay off in totally unforeseeable ways far into the future. Take, for example, YouTube. Google paid $1.65bn for a company that didn't have a way to make money, but it generates massive amounts of human-labelled data. Now, a decade later, with Google's distributed artificial neural net, YouTube is grant…
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Those are gaap earnings which are of minor relevance for high growth companies prioritizing usage and revenue expansion. The company made $363 million in revenues last quarter.
GAAP earnings == earnings in the context of the parent posts. Just because you slap a fancy acronym in front of the word "earnings" doesn't make it any different. However, revenue != profit. And, a 1% profit margin is pretty shitty friend.
A small profit margin is almost devoid of meaning for a company not trying to generate profits.
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Those are gaap earnings which are of minor relevance for high growth companies prioritizing usage and revenue expansion. The company made $363 million in revenues last quarter.
OK so I'm not a finance guy at all, but can you explain what I'm not getting: http://www.google.com/finance?q=NYSE%3ALNKD&fstype=ii 363M revenue. Minus a ton of things for operating income of 8M. Then tax brings it to 3.7M. On what basis are we supposed to think LinkedIn is suddenly going to eliminate > $300M of quarterly costs? If you do the "1 times revenue" (so about 1BN) that's still not close to being worth 32B.…
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OK so I'm not a finance guy at all, but can you explain what I'm not getting: http://www.google.com/finance?q=NYSE%3ALNKD&fstype=ii 363M revenue. Minus a ton of things for operating income of 8M. Then tax brings it to 3.7M. On what basis are we supposed to think LinkedIn is suddenly going to eliminate > $300M of quarterly costs? If you do the "1 times revenue" (so about 1BN) that's still not close to being worth 32B.…
A $1.5b run-rate on a product with $0 COGS and 60% growth after just 10 years in business is "making lots of money".