Those that have followed my posts here and in the press, know that I am skeptical about the valuation of Unicorns and IPOed ex-Unicorns, even when I do recognize the formidable value and innovation power behind most of them. My key question is: Where are the profits that can justify their stratospheric valuations?
This video from Bloomberg features a short but extremely interesting interview with one of the leading valuation experts, Aswath Amodaran.
Key takeaways to become a top dog in the new internet economy:
- You are a Unicorn or a former Unicorn IPOed in the middel of a financial bubble? Create a story difficult to disclose.
- Destroy competitors selling below cost.
- As an investor, do not bet against a momentum stock, even if the value makes no sense.
However, now that the FED is not showering around with money anymore, we may see many shakeups in the field. As a reminder: There have only been 2 Unicorn exits so far this year. At the same time, the merger Didi / Uber in China shows that the overvaluation of Unicorns is already hitting a wall, because financial resources for unlimited growth suddenly are not that available any more.
And what do smart global Venture Capital firms? They cover all bets and let their investments fight against each other. They know that a merger is in the end unavoidable and want to be able to sell their stake with profit in any event. Blackrock invested in both Uber and Didi. They knew what was coming.
European (and Norwegian) wannabe Unicorns should maybe start considering a sale?
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