Now we know!
I recollect an article by that epic (or is he epicurean, no epic I think) investor Luke Johnson where he explained that to understand tech entrepreneurs you need to read the comic books and watch the cartoons they watched as children and maybe still watch today. Within that genre I think I should include Dungeons & Dragons and online fantasy games too, don’t you think? If I have attributed the explanation incorrectly to Luke I apologise but the tale is none the less worth telling.
Because ladies and gentlemen with the IPO of SpaceX surely we can now put the price on a dream of going to Mars! This morning as I write Space X SPCX closed on a market cap of £1.9 trillion. Crikey. I don’t comment on the whys and wherefores of listed stock market prices, but value no longer has earthly geographic boundaries does it?
In the UK, I am most impressed by the success of Seraphim Space Investment Trust whose shares may not have gone stratospheric but have led to that rare occurrence where an investment trust trades at a premium to NAV.
All this of course informs the valuations of companies serving the space industry but perhaps more pertinently to most of us, those industries which are service what used to be called telecoms or ICT. The question of course is are we in a bubble in that sector. However even if we are, there is a case that the value of a private company in a similar place should also command a premium price compared with before the uplift in sector share prices took off and until, should it happen, they come back to earth.
Sadly I suspect that I will not be able to justify applying such premia to publishing companies (although the online gaming industry can move so fast in terms of achieving growth that private companies in that sector can become stupendously valuable shockingly quickly.
Meanwhile for us valuation landlings, the work goes on. There are increasing numbers of opportunities where valuation has become a critical issue to enable a transaction not only to be done, but also earlier, at the planning stage. We particularly enjoy the valuations we are preparing with the intention of using them in a real world situation where creating a scenario where a hypothetical buyer and hypothetical seller could notionally transact can be made much more complicated not only by the clever articles and shareholders you all write but also by real world complexities. I cannot tell you how satisfying it is when we present an argument to establish value in a particularly gnarly situation gets the response “yes I agree with you.”
