Everyday I keep expecting the bottom to drop out of these money losing companies. Etsy, Uber, even Tesla. What ever happened to the value proposition of investing? When did having a value producing product fall by the wayside?
Its been the better part of 10 years, since QE1, that I've been proselytizing the end of nonsense P/E ratios but the train keeps chugging.
I guess when the dollar itself has a nonsense valuation its no surprise that vaporware companies like Apple, Google and Tesla can out-compete "real" companies like Berkshire Hathaway and Boeing.
I am not sure if DoorDash's IPO price is more than it should be, but value creation (which is "real" in my view) need not always result in immediate profits and the stock market tends to be forward looking in general. How exactly are Apple, Google, Tesla and for that matter even Uber vaporware companies ? Some of them might be overvalued (by a large margin), but they still have real value in this world.
Vaporware? Those companies have real products that are everywhere. Google is ubiquitous in modern life. Apple is in all the pockets or the desktops of hundreds of millions. There are more Tesla’s on the road every day. Each of these companies innovates in multiple fields and has huge reach. Having outsized p/e doesn’t say anything about the company’s products.
Boeing is propped up by government funding and has had some huge screwups lately. BH doesn’t produce anything...
Your thesis isn't wrong (the market will return to value at some point) but your supporting arguments are. Apple in particular is as far from vaporware as it gets. And on the other side, Boeing's product situation is pretty dire.
$40bn valuation for $1bn in revenue & neutral profits. Growing about 40% per year. Obviously there is risk here, so the investment targets needs to account for it. It's a physical, price sensitive business, so profit margins won't be like FAANG-like.
So, in order to be successful (to IPO investors), doordash needs another 25X growth in 5 years... ish. I'm probably missing something.
(sheesh, asset prices are super-high atm... moving on)
Strategically, there's definitely something to delivery. It's prone to natural oligopolies. Delivery is also, at this point, the critical infrastructure retail generally... not just food. Same day delivery is a game changer for ecommerce, so owning that network does actually have the kind of potential needed for this kind of growth.
That said... the big worry is getting stuck with a similar issue to uber. The market may not bear many doordashes, but it will bear a few. Local competitors can play. Doordash might have their margins squeezed. It's certainly not a guaranteed success.
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[ 3.3 ms ] story [ 54.9 ms ] threadIts been the better part of 10 years, since QE1, that I've been proselytizing the end of nonsense P/E ratios but the train keeps chugging.
I guess when the dollar itself has a nonsense valuation its no surprise that vaporware companies like Apple, Google and Tesla can out-compete "real" companies like Berkshire Hathaway and Boeing.
Boeing is propped up by government funding and has had some huge screwups lately. BH doesn’t produce anything...
So, in order to be successful (to IPO investors), doordash needs another 25X growth in 5 years... ish. I'm probably missing something.
(sheesh, asset prices are super-high atm... moving on)
Strategically, there's definitely something to delivery. It's prone to natural oligopolies. Delivery is also, at this point, the critical infrastructure retail generally... not just food. Same day delivery is a game changer for ecommerce, so owning that network does actually have the kind of potential needed for this kind of growth.
That said... the big worry is getting stuck with a similar issue to uber. The market may not bear many doordashes, but it will bear a few. Local competitors can play. Doordash might have their margins squeezed. It's certainly not a guaranteed success.