Topic: .. - page 2. (Read 3244 times)

In a few years when this shit makes some IPO valuated at 5~10 bln USD 160 mln USD will be trully ridiculous

A declared value is a requirement for selling additional stock.  The new investors are putting in $30M.  What does their $30M buy them? 50% of the company, 1% of the company, 99% of the company?  Without some valuation for the company it becomes impossible to issue additional stock. 

A valuation is part of any offering.  If investors buy in then they are getting 15.7% of the company in exchange for $30M in capital.  As for the market deciding well that will happen.  If the offering is successful then the market (investors buying shares) are agreeing with the valuation, if it isn't then they are indicating the valuation is too high.  Either way it adds to price discovery.

They must be making a fair bit of money

dumb money quickly turns to dumb ideas.

I'd rather invest in Elvis collector plates than some of these outfits I've seen lately.

-bm

More than 20,000 clients are using the BitPay service, with turnover almost doubling every month. Look at the basics before you people accuse them of over-valuing themselves.

I think there's a lot of venture capital pouring into bitcoin businesses right now. Possibly much more than these businesses really need. Many of these businesses will no longer exist five years from now, but some might be extremely successful. Payment providers and exchanges are among those that offer a quite reliable business model with solid participation in a rising bitcoin adoption. So they are an alternative to a direct bitcoin investment - one that is less exposed to the price risk alone. This might explain why there is much interest by VC.

I'll add some comments about business valuation.

Say I've got a money-tree (like a goldmine with a certain reserve of gold) that pays out $100 every year for 10 years. How much would you pay for it? Well, the lifetime revenue is $1000. But you wouldn't pay $1000, because of the time value of money. $100 in 1900 is worth only $2 today due to inflation of prices, for example. When you have $100 today and accrue interest for 10 years, it's worth a lot more than getting $100 in 10 years. So there's some 'discount rate' every year, so the money-tree might only be worth say $750. The rate depends on many factors, it's just an example.

This is roughly how companies are valued. You look at revenue streams and discount them over some time and then pay for that, minus some risk factor that the company fails. In addition, you may pay for various assets, but sometimes they can be a small factor. After all, assets are only valuable to generate revenue which you already calculate, or to sell. But some assets aren't very valuable when sold. (e.g. if Bitpay or bitcoin fails, its bitcoin payment processing software or its bitcoins will have little resale value. So for Bitpay, revenues are the big factor).

So let's look at Bitpay, they've recently stated in a developer presentation that they process about 1-2m a day. Say 500m a year. They also made public they grow at about 10% a month, which is equal to Coinbase, Blockchain.info and Multibit for example, so it's a very reasonable number. We can also say they take 1% as fees like Coinbase does.

So their revenues are 5m annually, today, and their growth rate is 3x annually. So for the next 5 years that's 5m, 15m, 45m, 135m, 405m.

See now where the 160m valuation comes from? Of course, this is a very rough calculation. For example, they make less than 1% in fees to be exact, it's probably closer to 0.75%. Their 3x growth per year is of course impossible to continue indefinitely, it may slow to 2x or even 1.5x at some point. And I haven't applied the discount rate yet (which isn't huge, by the way), nor the risk that bitcoin fails. (but then, it is *venture* capital). If you value a company on its 10-year revenue stream like is often done, 160m is a very realistic rate.

Now, let's be clear, Bitpay didn't make this valuation by itself. You've got a number of silicon valley / entrepreneurial legends turned investors (top-ranking ones) who offered to buy close to 20% for 30m. THAT is the valuation. These VCs made the valuation. Now you can say it's ridiculous without any arguments, but if I'd have to guess, I'd probably side with the VCs. They're self-made. Not by a single stroke of luck, but by series of successful companies and successful investments. You can be assured they've done their homework.

The valuation looks a little frothy
The SV VC's discounting a very, very optimistic future for bitcoin by the looks of it
How defensible is bitpay's tech? Does anybody have any insight on this?

Honestly, this is no different than the companies around here that are making, say $500 in profit in 6 months and IPO at a valuation of $10m and still raise it all. People are getting stupider and assume that everything related to cryptos are automatically trillion-dollar companies just because we're talking about Bitcoin. As long as people keep making stupid decisions, companies will continue to be overvalued like this.

you're missing something here.  When something appreciates, it's MARKET VALUE has increased.  I can't just declare it to be more valuable.

-bm

This is exactly what happened, and is still happening, with Bitcoin. Every single day, people pay $500 for something (1 BTC) that less than a year ago, everyone agreed was worth ~$100.

Many assets appreciate and depreciate with time. Automobiles depreciate. Fiat scrip depreciates. Art appreciates. Cryptocurrency appreciates. That's what makes these things sound investments.

Another biased news article, either written under the influence of drugs or bribes from Paypal. If Master / Visa is worth some $200 billion, I don't see any reason why Bitpay can't be worth one-thousandth of that amount.

True, but the barrier to entry is low.  It will possibly be a very crowded space.  Does bitpay have anything innovative?

Please, bitpay is a pioneer in a virgin market that will likely be worth billions of dollars
Maybe fundamentally too high, but certainly not if you look at how valley VCs gauge potential and allocate capital

Is this the "big" announcement BitPay alluded to on their Twitter with "to the moon!" ?

How quickly?

Within 5 years you might have 8 companies with those assets.
5 years is forever in Bitcion.

But you know what, $160mil or $250mil makes sense IF we are betting on massive adoption
in the next 3-5 years, because then one could argue that their current
revenues and profits could be multiplied many times.

And I think that is what they are factoring into their valuation.

I really hope this is a joke.

We need a lot more information to know what Bitpay's real valuation should be though. Everyone here is just speculating. We don't know their financials, their p&l statements, or anything else we need to understand how the business is running. This information would help get a more solid view as to what the company is really worth.

I just bought this for $100.  I now declare it's worth $500.  This means I'm a brilliant businessman.



-bm

I think the valuation is ridiculously low. How quickly could bitpay be replicated both technology, management team, brand, and  trust?
Valuation should be $250 million.

6x = 3mil.

They are claiming 160mil.

We saw what happened with FB ipo with similar p/e.