Low visibility into how the sausages are made coupled with high incentive to juice up the 'headline valuation' make for a sketchy situation.
I agree with the conclusion(s). One thing I wonder about is how a company like this will fair any downturn in 1) easy money injections (no more private capital to burn) or 2) the general stock market (unfriendly environment for IPO). Presumably they would only be left with selling the company at a firesale if they get into trouble as you point out. Five years is a very long time to project growth, and we haven't had a meaningful downturn in financial markets since 2008 so it seems unlikely to me that one won't happen before 2020.
"In one sense, what you want in a bull market is a kid who is too young to know that what he is doing is foolish. You want a kid who will race into a bubble and leverage it higher and higher. Guys like me not make nearly so much money because we see what is going on. The kid does not know why he is making money, which is why he is making money. The rest of are experienced enough or smart enough to know that this is going to end badly. What you want is a kid with very little experience and just enough brains to be very dangerous. But you need to be smart enough to know when to pull out, to save yourself from his lack of knowledge and experience, and that, of course, can be hard to do. When things go bad,. you certainly do not want that kid around - and the kid is probably not going to be around by then anyway."
-- "Street Smarts: Adventures on the Road and in the Markets", by Jim Rogers, pg 63
I predict that middleman entities across all verticals will suffer an almost complete collapse due to enhanced automation of trade, including more complex cases of trade in services or renting of physicalia that need to be underscored by community feedback and reputation systems. This will be as true for Uber as for Airbnb, as true for Amazon (the retail interface only; not the warehousing or the IaaS) as for Ebay. I am in fact working on this problem. If anyone's interested in a long term bet and development in this direction, get in touch.
"Another question is if the market is ready for a $50B+ IPO. The current IPO record holder, Alibaba, was valued at $25B."
He misunderstood the reference; Alibaba raised $25b in their ipo but was valued much higher ($231b). There's plenty of room for a company worth 70b to ipo.
Low visibility into how the sausages are made coupled with high incentive to juice up the 'headline valuation' make for a sketchy situation.
I agree with the conclusion(s). One thing I wonder about is how a company like this will fair any downturn in 1) easy money injections (no more private capital to burn) or 2) the general stock market (unfriendly environment for IPO). Presumably they would only be left with selling the company at a firesale if they get into trouble as you point out. Five years is a very long time to project growth, and we haven't had a meaningful downturn in financial markets since 2008 so it seems unlikely to me that one won't happen before 2020.
"In one sense, what you want in a bull market is a kid who is too young to know that what he is doing is foolish. You want a kid who will race into a bubble and leverage it higher and higher. Guys like me not make nearly so much money because we see what is going on. The kid does not know why he is making money, which is why he is making money. The rest of are experienced enough or smart enough to know that this is going to end badly. What you want is a kid with very little experience and just enough brains to be very dangerous. But you need to be smart enough to know when to pull out, to save yourself from his lack of knowledge and experience, and that, of course, can be hard to do. When things go bad,. you certainly do not want that kid around - and the kid is probably not going to be around by then anyway."
-- "Street Smarts: Adventures on the Road and in the Markets", by Jim Rogers, pg 63