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0 pointsTaek1y ago0 comments

How is 6x generous? Alphabet's P/E is 23. That means $2 billion rev implies $46b valuation (assuming high margins)

These deals always have more than meets the eye. Google wouldn't acquire revenue at a fair market price just for revenue's sake - there's some reason they expect to get value beyond the revenue.

That doesn't mean its nepotism. It could be that they think they can triple revenue per customer with some synergy. Or any number of a large set of other possibilities.

If you want to understand this type of transaction better, you can read a book on M&A

0 comments

tgma1y ago

P/E is the earnings multiple, not revenue. Your assuming high margins is doing a lot of legwork here. Often untrue for growing startups.

encoderer1y ago

It’s the growing part that increases the multiple.

tgma1y ago

Sure, I was not commenting on the deal per se, but that specific argument to compare Alphabet P/E with Wiz revenue multiple of Alphabet is a deeply flawed one, and is all too common among non-finance people.

bflesch1y ago

They advertise "Unified visibility and security across code, CI/CD, and cloud environments" - maybe it's google's way to siphon off proprietary code from private Azure and AWS environments in order to train their AI. Google does not own Github, they must be severely lacking in private training data.

j / k navigate · click thread line to collapse

0 pointsTaek1y ago0 comments

How is 6x generous? Alphabet's P/E is 23. That means $2 billion rev implies $46b valuation (assuming high margins)

These deals always have more than meets the eye. Google wouldn't acquire revenue at a fair market price just for revenue's sake - there's some reason they expect to get value beyond the revenue.

That doesn't mean its nepotism. It could be that they think they can triple revenue per customer with some synergy. Or any number of a large set of other possibilities.

If you want to understand this type of transaction better, you can read a book on M&A

0 comments

tgma1y ago

P/E is the earnings multiple, not revenue. Your assuming high margins is doing a lot of legwork here. Often untrue for growing startups.

encoderer1y ago

It’s the growing part that increases the multiple.

tgma1y ago

bflesch1y ago

j / k navigate · click thread line to collapse