A Healthy Dose of Reality
Sorry, but someone has to do it. Numbers thrown out of thin air with no meaningful analysis or reasoning behind them are worthless. Believe me, I'd like nothing more than to see Wave reach $25,125 1/16 per share, but lets be realistic.
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Let's discuss the possibilities on what basis we might be evaluated:
1) Valuation/customer acquisition cost*
Useful when comparing peers to see which may be valued at a relative discount based on customer growth efficiencies
2) Revenue multiple (or market cap/revenue)
Primary method for valuing Internet stocks since most firms are not earnings positive. Or if they are, the P/E is often off the charts still
3) Revenue per subscriber
Primary way to value ISPs such as PSINet, Earthlink, Mindspring or AOL
4) Lifetime value of an e-buyer*
This is the metric we think will be key very soon in valuing Internet companies, especially Amazon.com, CDnow, Egghead, ONSALE and etailers (and it is!)
These metrics come from:
internetnews.com
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To determine any future price, it will be very important to determine which metric(s) Wave will be based on. My guess is a cross between Revenue per Subscriber and Lifetime Value. Valuations based on Revenue per Subscriber will be easy to calculate; we just need a few projections on subscribers/subscriber growth and estimate how much each subscriber will spend.
The Lifetime value metric will be more complex and should be some aggregate number. This number might be calculated using some formula of the combination of lifetime values of other internet companies since Wave, in effect, sits atop these companies.
In any case, Hauppage deployment will help us get started on figuring out just how much a subscriber is worth. Then, as more content becomes available, this number should trend upward until it reaches critical mass. It will probably also be further broken out by type of subscriber (home or business) Now, whether we'll be privy to this information or not, is another matter. If not, I'm confident we have enough sleuths out there to come up with a reasonable number.
Comments anyone?
---Slate |
