Re:Only in SV could Elizabeth Holmes lose $4.5B she never ha...
by dragonwriter on Wednesday June 15, 2016 @06:50PM
(#11912717)
> $9 billion is the statistically expected value
No, $9 billion is the subjective expectation of the party or group of parties willing to pay the most.
(Now, no doubt, they apply some kind of statistical formulae to conclude that that is the statistically expected value, but its also clear that other potential investors are also doing that with different models, and in the case of disagreement, the ones assessing the valuation the highest are, ceteris paribus, the ones with whom a deal will be made. Valuations derived from public market caps have some problems, and may not be justifiable rational expectations, but they are at least some kind of broad consensus. But private-deal-based valuations are inherently inflated by the way deals get made.)
No, $9 billion is the subjective expectation of the party or group of parties willing to pay the most.
(Now, no doubt, they apply some kind of statistical formulae to conclude that that is the statistically expected value, but its also clear that other potential investors are also doing that with different models, and in the case of disagreement, the ones assessing the valuation the highest are, ceteris paribus, the ones with whom a deal will be made. Valuations derived from public market caps have some problems, and may not be justifiable rational expectations, but they are at least some kind of broad consensus. But private-deal-based valuations are inherently inflated by the way deals get made.)