"When you look at the rumored Snapchat valuations of over 3 billion dollars, it’s difficult to understand how an investor can think that Snapchat is worth that much. Because the truth is, it’s not."
This is wrong. Facebook offered to buy Snapchat for $3 billion. If there is a better way to appraise market value than the fact that one of the most successful companies on earth is willing to buy you for that price, I don't know what it would be.
The notion a transaction has to occur for there to be a 'true' value set, is also false. Try telling the IRS your billion dollar company is worth a dollar, because it has never been involved in a merger / acquisition / publicly floated. That simply is not how companies are valued in accounting or finance (aka anywhere that matters when determining valuations).
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"When you look at the rumored Snapchat valuations of over 3 billion dollars, it’s difficult to understand how an investor can think that Snapchat is worth that much. Because the truth is, it’s not."
This is wrong. Facebook offered to buy Snapchat for $3 billion. If there is a better way to appraise market value than the fact that one of the most successful companies on earth is willing to buy you for that price, I don't know what it would be.
The notion a transaction has to occur for there to be a 'true' value set, is also false. Try telling the IRS your billion dollar company is worth a dollar, because it has never been involved in a merger / acquisition / publicly floated. That simply is not how companies are valued in accounting or finance (aka anywhere that matters when determining valuations).