Bart Wronski 🇺🇦🇵🇸🌕
Maciej Sinilo
Krzysztof Narkowicz@msinilo @BartWronski Tencent is somewhat specific, as its valuation is heavily affected by the Chinese Government and their actions. By law foreign investors can't even own Chinese Internet companies and many of their companies have third party entities to be able to participate in western markets, so it's even unclear what do you own when you buy shares. If this would be Western company their shares would explode, as they are incredibly undervalued when compared to NV.
@k_narkowicz @msinilo are they also affected by general uncertainties of Chinese economy? Their real estate market collapsing etc.
But I was also thinking about struggles of many US domestic game companies, tanking stock of Unity and similar, massive layoffs, even Epic that was so far bulletproof being concerned
But I was also thinking about struggles of many US domestic game companies, tanking stock of Unity and similar, massive layoffs, even Epic that was so far bulletproof being concerned
@BartWronski @msinilo That too, but in general gov interventions like big tech crackdown in 2020 feel like the major reason, when gov showed that it's not playing around. Layoffs hit almost everyone. Unity always had poor financials, but Metaverse hype pushed the stock up. Now it's AI hype time, so Unity stock went down to more reasonable levels and NV and AMD goes to the moon (e.g. here's a good NV valuation, pretty optimistic assumptions, but still only ~250) https://aswathdamodaran.blogspot.com/2023/06/ais-winners-losers-and-wannabes-nvidia.html?m=1
@k_narkowicz @BartWronski yeah, I dont follow it _super_ closely but it seem biggest changes are results of government actions rather than company results. Eg it took another big dive end of 2023 after https://www.theguardian.com/world/2023/dec/27/chinese-gaming-shares-fall-as-regulators-announce-new-proposals .. which was bad enough that they partially reverted it and found some scapegoats
@msinilo @BartWronski Yes, China is very special, as Beijing has a lot of power over their companies as opposed to the US. That said, in general prices don't have to closely follow value (company results). Especially when looking at the short term, where it's more like a measure of current mood and momentum. In the long term they should converge, or at least that's my excuse for spending weekends filling valuation spreadsheets :).
@k_narkowicz @msinilo there are numerous unprofitable companies that last for more than a deade with still decent stock prices, so you must be talking about a very very long term ;)
I personally don't think company results have anything to do with the stock price. It's only expectation of future value, or even a derivative of expectation of future value.
I mean, you don't make money from their results for most? (Only some pay dividends) but from selling at a higher price...
@BartWronski @k_narkowicz for sure, especially with all the 'internet companies' because their product is so elusive, so even if they keep losing money, often their value is derived mostly from the number of users, with the hope that 1 day they will find a way to monetize it somehow (see Twitter)
@msinilo @BartWronski Twitter is (was?) one the most important social media in the world, so even without amazing financial results it was still worth a lot. Here's a valuation from Professor of Finance specializing in valuation and he arrived at a similar price as the stock market, so at least it wasn't a completely crazy number: https://aswathdamodaran.blogspot.com/2022/04/elons-twitter-play-valuation-and.html?m=1
