The hottest Valuation Substack posts right now

And their main takeaways
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New launches (part 1) - private capture, phantom pricing

Cobie • 171 implied HN points • 19 May 24
🔮 Crypto Investing Tokenomics Market Trends Valuation
  1. New token launches are tough to invest in because a lot of the price discovery happens in private markets, leaving regular investors with less opportunity. It's important to do your homework before jumping in.
  2. Higher valuations for new tokens now reflect more demand in the market, but many of these valuations don’t match the actual value of the tokens. It's key for investors to look deeper into the numbers behind the hype.
  3. Buyers should be cautious with low-float tokens, as they can be more easily manipulated. Understanding the float, FDV, and market demand is essential before investing.

Finance 101 for Crypto Degens, Part 1

DeFi Education • 1159 implied HN points • 17 May 22
💰 Finance Investing Corporate Finance Valuation Crypto Debt Management
  1. The time value of money means that money now is worth more than money in the future because you can invest it and earn a return. This idea explains why banks charge interest on loans.
  2. Understanding capital structure is important. It distinguishes between the types of capital a company uses, like debt (bonds, loans) and equity (ownership shares), and how these affect the company's value and risk.
  3. Discounted cash flow analysis helps evaluate the value of a business by looking at its expected future cash flows. This method shows how much future money is worth today, factoring in investment risks.

A lot of times you just need more bidders

Something to Consider • 19 implied HN points • 14 Jul 24
💼 Business Economics Auctions Valuation Market Power Competition
  1. Having more bidders in an auction often leads to better outcomes. More bidders means a higher chance that someone will value the item enough to buy it.
  2. In auctions, it's usually better to have more bidders than to have perfect control over the auction. More bidders can drive up the price and lead to better allocation of goods.
  3. Collusion is less likely to happen when there are many bidders competing against each other. More competition means it's harder for bidders to secretly agree on lower prices.

Understanding Valuation Methods

DeFi Education • 1978 implied HN points • 30 Jun 21
🔮 Crypto Valuation Investing Decentralization Market Analysis Financial Metrics
  1. Having users is really important for a project's value. A company that has a lot of users is usually seen as more successful, even if it's not making money yet.
  2. Sales and profits are not the same thing. Just because a company makes a lot of sales doesn't mean it's actually earning money after paying all its costs.
  3. Quick valuation methods, like comparing sales and earnings, can help you understand a project’s worth. However, you should also consider user growth and how the project makes money.
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How Do Investors Protect Themselves from Downrounds Through Weighted Average Anti-Dilution Protection? | Paul Graham's Article & More

Venture Curator • 239 implied HN points • 24 Jul 23
💰 Finance Investment Valuation Venture Capital Remote Jobs
  1. Investors use Anti-Dilution Protection to safeguard against down-round situations, like Stripe's valuation decrease from $90 billion to $50 billion.
  2. There are two types of Anti-Dilution Protection: Full Ratchet and Weighted Average, each impacting investor ownership differently.
  3. Weighted Average Anti-Dilution Protection involves calculating new share conversion prices to adjust ownership percentages after a down round, ensuring fair investor protection.

Yearn Finance (Part 2 of 2) - Valuation, Issues, Risks and More

DeFi Education • 1858 implied HN points • 07 Jul 21
🔮 Crypto Blockchain DeFi Investing Valuation Risks
  1. Yearn Finance has different ways to determine its value, and it's important to think about how fast it might grow in the future.
  2. You need to make key assumptions about the long-term growth rate and how much you should invest.
  3. There are some specific risks and issues that come with investing in Yearn Finance that people should be aware of.

Thinking about Writing Down your Investment?

SaaS Engineering • 137 implied HN points • 07 Jan 24
💰 Finance Investments Venture Capital Startups Valuation Capital Markets
  1. Understanding the difference between preferred and common stock is crucial for calculating holding values.
  2. Writing down investments only makes sense if a company's value decreases below the size of its liquidation preference relative to the investment.
  3. High valuations may not always benefit investors due to misaligned incentives, especially in scenarios where the company's valuation is higher than its true worth.

Facebook (Meta) Lesson 2: Accounting Inconsistencies and Consequences

Musings on Markets • 619 implied HN points • 10 Nov 22
💼 Business Accounting Finance Investing Corporate Governance Valuation
  1. Accounting mistakes can misclassify expenses, affecting a company's reported profits and overall valuation. When money is wrongly categorized, it can look like a company is performing worse than it actually is.
  2. Correctly categorizing expenses like R&D can show a company’s true financial health. For example, treating R&D as a capital expense can increase reported profits and the value of the company.
  3. Understanding these accounting practices is important for investors. If investors misjudge a company due to these accounting errors, it may lead to undervaluation, making the company look cheaper than it really is.

Facebook (Meta) Lesson 3: Tell me a story!

Musings on Markets • 539 implied HN points • 18 Nov 22
💼 Business Valuation Investing Corporate Governance Market Analysis Financial Reporting
  1. A good business valuation combines numbers with a compelling story. The story helps make sense of the numbers and gives them context.
  2. Storytelling is important for investors because it makes a business memorable and helps communicate its potential. However, numbers are crucial to maintain credibility and accountability.
  3. As market conditions change, so must a business's story. Companies like Facebook need to adapt their narratives to remain relevant and regain investor trust.

ARM IPO Breakdown

Mule’s Musings • 346 implied HN points • 12 Sep 23
💼 Business Tech industry Finance Valuation Competitive Analysis
  1. ARM is an important company in the IP industry, famous for its power efficiency and reduced instruction set.
  2. ARM's history includes significant milestones like going public in 1997 and being acquired by Softbank in 2016.
  3. The ARM IPO is highly anticipated, with the company aiming to list between 50-55 billion, showcasing its key role in the industry.

Dissent and Debate: The Pushback on my Tesla Valuation

Musings on Markets • 379 implied HN points • 03 Feb 23
💰 Finance Investing Valuation Market Analysis Economic Forecasting Corporate Finance
  1. There are strong opinions on both sides regarding Tesla's future value. Some believe it's undervalued, while others think it's overvalued, showing how divided people are about the company's potential.
  2. Revenue growth estimates are tricky; as companies get bigger, it's harder to keep high growth rates. The idea is that Tesla will reach a certain revenue and then grow slowly, like many large companies.
  3. Cost of capital is an important factor in valuing a company. For Tesla, using a realistic cost of capital helps in understanding its financial potential, even if different viewpoints exist on what that number should be.

AAVE Part 2 - Valuation Methodology and Q&A Is Open!

DeFi Education • 1278 implied HN points • 19 Jul 21
🔮 Crypto Blockchain DeFi Investing Valuation Income
  1. AAVE earns most of its money by charging interest on loans, much like a traditional bank. This means that understanding interest rates is key to their success.
  2. Valuing AAVE involves analyzing its potential for growth and how well it can generate income in the future. This is important for investors to know before putting money in.
  3. There is an opportunity for discussion and questions about AAVE's valuation, indicating that community engagement is encouraged. People are invited to join in and share their thoughts.

How to Build a High Growth and High Value Consultancy

Michael’s Newsletter • 157 implied HN points • 26 Sep 23
💼 Business Consultancy Strategy Valuation Growth Differentiation
  1. Long-term contracts and high projected growth rates are key for building a high-value consultancy.
  2. Consultancies can increase their valuation by securing multi-year contracts and focusing on scalable growth strategies.
  3. Specializing and differentiating in your field can help a consultancy stand out and attract long-term clients.

Would Apple buy Disney?

Jon’s Newsletter • 279 implied HN points • 02 Apr 23
💼 Business Mergers Valuation Market Trends Corporate strategy
  1. There are talks about a possible merger between Apple and Disney because they could create more value together than apart. Both companies have strong content and distribution networks that could complement each other well.
  2. Disney is currently facing challenges, including job cuts and a shift to digital streaming. CEO Bob Iger is dealing with a lot of changes and questions about the company’s future direction.
  3. If Apple were to buy Disney, it might be a big win for both. Analysts think that it could increase value for Apple shareholders significantly, making it a potentially worthwhile investment.

Curve Part 2 - Valuation and Q&A

DeFi Education • 839 implied HN points • 09 Aug 21
🔮 Crypto Valuation Analysis Investing Assets Market Trends
  1. Understanding the valuation of CRV is important for making informed investment decisions. It helps you see how valuable this asset could be based on different factors.
  2. The content emphasizes that what is shared is not a definitive valuation or recommendation. It's meant to be a guide for your own assessment.
  3. Engaging with the valuation framework allows individuals to grasp the potential for value accumulation and how to interpret it. This enhances your ability to analyze the asset effectively.

A Zomato 2022 Update: Price, Value and the Gap!

Musings on Markets • 399 implied HN points • 27 Jul 22
💰 Finance Stock Market Valuation Investing Economic Factors Company analysis
  1. Zomato's stock price was initially high after its IPO but has now dropped significantly due to a mix of poor earnings results and macroeconomic factors. This shows how momentum can affect stock prices.
  2. Despite the challenges, Zomato is still growing and has a strong market share in India's food delivery sector. They have a good amount of cash from their IPO to help them in tough times.
  3. The company is exploring new areas like grocery delivery, but it raises questions about their profitability and strategic focus. Investors need to keep an eye on what's next for Zomato.

FRAX: The Fractional Algorithmic Stablecoin (Pt. 2)

DeFi Education • 639 implied HN points • 14 Dec 21
🔮 Crypto Stablecoins DeFi Valuation Risks Market Analysis
  1. Frax is a unique type of stablecoin that combines both fractional and algorithmic features. This means it aims to maintain a stable value while also using smart contracts to help adjust its supply.
  2. In just six months, Frax's financial mechanisms, known as AMOs, made over $50 million in profits. That's a big boost in a short time, showing its potential for growth.
  3. There are benefits to using Frax, but there are also risks involved. It's important for users to understand both sides before getting involved.

1Inch - Valuation and Risks (Part 2)

DeFi Education • 659 implied HN points • 05 Sep 21
🔮 Crypto Decentralized Finance Valuation Risks Governance
  1. 1Inch's valuation is tied to its governance rewards, which come from fees on swaps and price impacts. This means their income depends on how much the platform is used.
  2. There are risks associated with the 1Inch protocol that investors need to consider. Understanding these risks can help in making better investment decisions.
  3. Improvement ideas for 1Inch could enhance its performance and income generation. It's important to think about ways to attract more users to the platform.

Maker DAO (Part 2 of 2): Valuation, Risks and More

DeFi Education • 619 implied HN points • 18 Sep 21
🔮 Crypto DeFi Valuation Risks Strategies Investment
  1. MakerDAO has a unique way of valuing its assets and managing risks, which is important for users to understand. It's key to know how much your investments are worth and what could go wrong.
  2. Users need to be aware of issues like impermanent loss, which can affect their returns. It’s a risk that can happen when investing in DeFi projects.
  3. Having strategies to reduce rug pulls is essential in the DeFi space. This can help you feel safer when investing and potentially prevent losses.

Perpetual Protocol (Part 2)

DeFi Education • 539 implied HN points • 10 Nov 21
🔮 Crypto DeFi Valuation Trading Analysis Protocols
  1. Perpetual Protocol makes money from trading fees, earning 0.1% on every trade. In 2021, it generated $31 million in fees.
  2. Valuation methods like Price to Earnings help understand the protocol's financial health. It's a useful way to analyze how well the platform performs.
  3. The post also discusses other decentralized exchanges (DDEX) such as dYdX, GMX, and MCDEX as alternatives to Perpetual Protocol. This comparison can help users choose the best option for trading.

Alchemix Overview - Part 2 of 2

DeFi Education • 559 implied HN points • 15 Oct 21
🔮 Crypto Blockchain Decentralized Finance Tokens Market Analysis Valuation
  1. Alchemix uses a Price to Earnings analysis to determine its value based on how much money it makes. This helps understand how profitable the protocol is.
  2. The protocol earns a 10% performance fee as an affiliate, meaning it gains a portion of the earnings from Yearn Finance's activities.
  3. There is a comparison table included that shows how Alchemix stacks up against other tokens in terms of various financial metrics.

How to calculate P/E ratio

Shivansh • 19 implied HN points • 26 Apr 24
💰 Finance Investing Stocks Valuation Metrics Market Analysis
  1. P/E ratio compares a company's stock price with its earnings per share, providing insight into investor perception and market sentiment.
  2. Calculating P/E ratio involves dividing the current stock price by the company's earnings per share (EPS).
  3. Different types of P/E ratios like trailing and forward help in assessing past performance and future earnings, aiding investors in comparing valuations and identifying trends across industries.

Warren Buffett’s Rare Big Investing Mistake

Behavioral Value Investor • 148 implied HN points • 06 Aug 23
💰 Finance Investing Mistakes Valuation Profitability Lessons
  1. Even successful investors like Warren Buffett make mistakes, which is a crucial lesson for all investors.
  2. When investing, it's important to stick to your circle of competence to avoid big investing mistakes.
  3. Paying a high price for an investment with little room for error can be a risky move, highlighting the importance of a margin of safety.

Nexus Mutual (Part 2) - Valuation

DeFi Education • 459 implied HN points • 01 Oct 21
🔮 Crypto DeFi Valuation Investment Insurance
  1. Nexus Mutual is getting attention as more big investors start to enter the market. They might want insurance, which could help Nexus grow.
  2. Many regular investors might not see the need for insurance, but larger funds handling over $200 million will likely feel it's essential.
  3. The demand for insurance in the DeFi space is expected to rise, especially with institutional money looking for security in their investments.

Alternative Investment Guide #1 - Art

Concepts of Finance 🧠 • 99 implied HN points • 25 Jun 23
💰 Finance Investing Assets Market Analysis Risk management Valuation
  1. Art investing can be a lucrative opportunity, with some estimates showing returns of around 9% to 14%.
  2. The art market is large and valued at over $1.5 trillion, but it can be tricky for newcomers due to its complexity and the influence of wealthy insiders.
  3. There are more ways than ever to start investing in art, including art funds and fractional ownership, making it accessible for beginners.

Death to Revenue Multiples: Long Live the DCF!

Equal Ventures • 59 implied HN points • 14 Jun 23
💰 Finance Valuation Investing Technology Industry Cash Flow Competition
  1. Revenue multiples have been traditionally used for valuations in the tech world, but they are proving to be ineffective in determining the true long-term value of businesses.
  2. Companies shifting focus from forecasting future cash flow to revenue growth have faced challenges, as revenue multiples don't necessarily reflect future profitability, leading to discrepancies in valuation.
  3. As competition accelerates in the tech industry, companies with strong market captivity and efficient growth strategies are prioritizing developing competitive advantages and generating long-term free cash flow over chasing revenue multiples.

A simple take on AI, MBAs going back to finance and some Q1 valuation data

Bigfoot Capital • 39 implied HN points • 06 Jul 23
💼 Business AI Finance Tech Valuation
  1. Zooming out from AI: Operators should focus on tangible ways to utilize new technologies rather than making risky moonshot bets on AI.
  2. Pendulum Swing: MBAs are increasingly choosing finance jobs over tech jobs as the job market fluctuates.
  3. Q1 Valuations: Uncertainty remains about the economy, but valuations have returned to historical trends with high burn rates posing challenges in the venture space.

Big tech stocks are surging. Why is that bearish?

Jon’s Newsletter • 39 implied HN points • 15 May 23
💰 Finance Stock Market Investing Valuation Economic Trends Market Analysis
  1. Big tech stocks have seen huge gains, primarily driving the rise of the S&P 500 this year. This doesn't mean the overall market is in trouble, though.
  2. Experts believe that the concentration of these tech stocks doesn't affect future market performance significantly, so there’s no need to worry.
  3. Many stocks outside of tech are doing well, and a lot of analysts expect major tech companies to keep rising in value over the next year.

Attempting to untangle the messy math behind the "Power Law"

Entry Level Investing • 84 implied HN points • 28 Feb 23
💰 Finance Investing Venture Capital Startup Financing Valuation Business Models
  1. The concept of the 'Power Law' in venture funding states that a few successful investments drive fund returns, not a normal distribution.
  2. Startup valuations are often based on revenue multiples, deviating from traditional valuation methods like free cash flow analysis.
  3. Overvaluation, excessive spending, and failure to grow into valuations can lead to down rounds, hurting startups and investors.

Sea Limited

Modern Value Investing • 19 implied HN points • 19 Nov 23
💰 Finance Investing Valuation E-commerce
  1. Sea Limited operates in three main segments: Digital Entertainment (Garena), E-commerce (Shopee), and Digital Financial Services (SeaMoney).
  2. Using a sum of the parts valuation approach, Sea Limited is considered undervalued, offering significant upside for long-term investors.
  3. Shopee is a dominant player in Southeast Asia's e-commerce market with a strong localized approach, mobile-first strategy, and a potential future valuation of $91 billion by 2033.

Understanding startup stock options: Part 1

Brick by Brick • 18 implied HN points • 19 Feb 24
💰 Finance Stock Options Taxation Valuation Liquidity
  1. Stock options are a key part of startup employee compensation, involving vesting schedules and the opportunity to buy company shares at a set price.
  2. 409A valuations determine the fair market value of a company's stock, influencing employee stock option prices and taxation.
  3. The 90-day window after leaving a company requires employees to decide whether to exercise their vested stock options or lose them, potentially facing significant financial implications.