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Ridiculous Valuations of some of the present dot-com companies

Ridiculous Valuations

Looks like another bubble burst like the 2000 dot-com bubble is nearing again. For the past 2 years I have been cautioning people at various forums that some of the internet companies (unlike in 2000 where literally almost every internet company valued obscenely) are being valued so highly without any fundamental financial logic. I am yet to find a financial expert who would say a P/E ratio of 80 (for Facebook) is decent; forget about the P/E ratios of Flipkart, Uber or Whatsapp where you cannot even calculate P/E for they are making huge losses.

These companies defy fundamental financial logic. When I used to talk about these absurd valuations two years ago, people used to keep quiet thinking that they would be branded as novices who do not understand internet businesses and also might be that I was insane. I never moved with the crowd unless I felt they were right. Am glad that now-a-days I see an article or two coming up reinforcing what I have been talking about for the past two years regarding ripe valuations ready to burst. No one is sure of the timing of the burst but definitely it would happen though not at the scale of 2000 dot-com bubble burst.

For most of the investors (VCs or others), it’s like – make hay while the sun shines, though they may not admit in public; especially in the cases where the valuations gone ridiculous. Simply put, it is nothing but stock market gamble artificially hiking the valuations devoid of basics/fundamentals.