Facebook is the most popular social networking site currently. It might be the most important thing for a 16 year old teenager, but is this a winning investment? The company has yet to moentize its user base to the utmost. So one can’t ignore the upside factor. To dig deeper, I decided to look at other ‘hot’ tech startups which have gone big over time. There isn’t a comparable which is exactly like Facebook as none of the social networking companies are public. So I decided to go with tech startups that were considered the ‘Hot’ thing in their times. Below is the rev multiple and stock price movement of 2 big companies from their IPO days, Google and VM Ware.
Source: CapitalIQ
Given the range of these tech stocks, Elevation might be lucky to get return on their current round of investment. Then I decided to look at valuation of companies in the current economic environment and did a screening analysis of companies globally that are above 20bn market cap and have revenue of less than a billion. As my screen results only two companies showed up worldwide: Baidu and a Ezdan Real Estate (a real estate company in Qatar)
Can someone point out how to go short a private company?
Good news: Facebook is hiring and big time, several engineering and business positions are open both in US and globally. So if Facebook gets the valuation that Elevation is going for, there is no better place to work in US (other options can be China and Qatar)
Not so good news: Elevation yet again makes a marginal return investment
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