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Tale of 2 companies


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* 2 companies have roughly the same market cap ~$20 bn

* Company A reported $1.8 bn in revenue over the last 12 months (2Q15) and a hefty loss on all metrics (yes, even EBITDA), so the best we can say is it trades at a very lofty >10x revenues, in the hopes it will someday make some money...

* Company B reported $8.8 bn in revenue over the last 12 months, of which $3.6 bn was eCommerce driven, with $1.7 bn of that mobile commerce driven (yes, almost as much as total for company A). This company, however, earned $1.9 bn in OIBDA and nearly $1.3 bn in EBIT over the same period, and owns a majority stake in another company valued at $1.3 bn...

* Company A is Twitter, which trades on a multiple of forward hopes and dreams...

* Company B is QVC, which sports one of the highest OIBDA margins of any retail company, yet, unfortunately trades as an "old economy" company

...maybe they'll rebrand as a high-flying mobile eCommerce enterprise? ;)

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So, we can have a rational traditional evaluation/comparison of high flying companies???? really?


Company A: no meaningful earnings for 20yrs , P/S 2.5x

Company B: P/E 15x, P/S 0.5




I saw some articles that compared the following two companies:


Company A: eps -$3, fwd PE 85 , P/S 30x, and even these sales require government subsidies

Company B: was one of the most profitable companies for 50 years before it went public


(A: TSLA, B: F)



Now I'd probably be laughed off this board for saying that. But I have seen 1999 . I was in Cisco through a buyout. And I had some idea of PE, interest rates, cost of capital..... But I couldn't see how with the stock options being given out, the the companies could be worth such. But the argument was always, we are in the cusp of a new era where traditional financial thinking don't apply.


Now I see a similar head scratcher.  A new generation of men and women who didn't finish college but have 170 IQ are selling companies at billion dollar valuations without a formal plan to earn money in decades. I don't know what products we use 15yrs from now. I bet none of us guessed the proliferation of smartphones 15yrs ago.


If you think all I've said is crap, then ya.... maybe twitter is worth whatever its worth.


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