Was Mr. Page right in paying 1.6 billion dollars(albeit in stock) for a site that lets people upload their homemade videos? This is what half the world was discussing when the announcement came. Not anymore.
Then, there was this new question that had taken its place. Can Mr. Page justify YouTube's valuation? Can Google monetize the loyal (& registered) membership that YouTube offers?
Now they have started calling YouTube "the 1.6 billion dollar Web2.0 giant". Why?
Consider this. If we all agreed to accept cigarettes/Keys/Nuts/Bolts as valid currency... Just Imagine. Each Bolt would buy you two CoffyBites (oh I love that too!). Two keys would buy you a Mc Aloo tikki Burger.
Two keys may not exactly be worth twenty rupees. But you would still take twenty Bolts. This means the bolts, the nuts and the keys have gained currency. Currency is the crux of any transaction. If you have not agreed on the currency, you have agreed on nothing.
The DCFs, the multiples and all the other valuation theories of the world are used because they have gained currency. No matter what the valuation metric, if there is someone else ready to pay the same ( or more) today (or later) then your price is worth it.
This argument is more true for acquisitions in stock. You are paying nuts for bolts! It is completely worth it!!
If there are enough duds (or studs) who believe that YouTube is worth its popularity in silver dollars, then so be it. If they are ready to pay five hundred dollars (20,000 bux!!!) for Google shares, then so be it. Google shares, the YouTube valuation and our cigarettes our nuts our bolts & our keys have all gained currency!Labels: valuation Google currency |
