There is a strong argument to be made that the most metrics that matters are the current market cap to the market opportunity, Competitive Advantage Period, and the position of the individual company on its S-curve, but I found it a useful read as I like to ask myself, “what if I’m wrong?” on a regular basis.
https://tomtunguz.com/what-a-valuation-implies-about-a-busin…
So, nothing that hasn’t been discussed before, but an interesting perspective from someone who has looked at EV/S fwd for 17 years.
The level of risk you can tolerate is down to the the individual investor of course.
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Entirely consistent with the article, but what it doesn’t explicitly state is that if the market assumes rev growth will be consistently high or even accelerating over the next 3 years then clearly, the company will trade ahead of the herd as far as multiples are concerned.
I think this is what we see with Zscaler and MDB as examples.
There is a danger in lumping all SaaS companies together. SAAS is a business model, not a product.
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Hi tchalla,
May be it was you who brought Tom Tungaz to this board…
I found his thoughts and articulation very valuable. very astute guy.