HEY EVERYONE!
We just got out of school, and the Superbowl just happened! Honestly, I'm not really much of a sport fan at all, but the food is still pretty darn good, and it's fun to watch people get really overly passionate and argue with each other. My research is going great right now, and its really starting to develop into something that I like doing.
Right now, I've just finished all of my data collection, and am in the process of finding the specific comparable firms for each firm that I outlined within my question. As of now, I've only found comparable firms for Facebook (which are Google, Apple, and Microsoft), but I have all the data for the other firms, so I don't envision my work being too much in respect to that. I can get that done by Thursday, and that gives me a week and a half to begin my multiple analysis, which should be ample time given that it only involves comparing only a few numbers (only the range of the 50's, rather than the hundreds I've had to deal with up to now.) The big problem that I now am seeing for my firms is in respect to the comparable firm group itself. This problem really only surfaces with Facebook, but it may possibly have a big impact on the results of my study.
Essentially, the problem is that there are incredibly few firms like Facebook that are wildly successful, or at the "mega-capitalization" size. This essentially means that the number of comparable firms that I have to choose for Facebook is dramatically decreased. In fact, Google, Apple, and Microsoft are the only eligible firms at Facebook's level. I could potentially consider firms with fewer assets than Facebook, but this difference starts getting big very quickly: in nearly the 200 Billion Dollar range. I think I have found the very first limitation of my paper: that companies which are wildly successful are very difficult to have prices that are easy to predict because of the few comparable firms that they have. Although none of my other firms have assets as large as Facebook, and have comparable groups in the hundreds, I fear that this data may not ultimately be applicable to Snapchat. Snapchat's IPO has been valued in the 25 billion dollar range, something which is already incredibly high. Ultimately, I think I'll have to wait and see how the comparable firms for he other companies turn out, but I'm not too hopeful for the future.
This result could point to something more intrinsic to the social media industry for the future, however. Perhaps, because of these large social media firms already attracting consumers, there is such a large barrier to entry to the industry that only uniquely special, large firms that are difficult to value can enter the industry.
Either way, it seems like I have a handful ahead of me when analyzing my results. (495)
Signing off,
Akash
We just got out of school, and the Superbowl just happened! Honestly, I'm not really much of a sport fan at all, but the food is still pretty darn good, and it's fun to watch people get really overly passionate and argue with each other. My research is going great right now, and its really starting to develop into something that I like doing.
Right now, I've just finished all of my data collection, and am in the process of finding the specific comparable firms for each firm that I outlined within my question. As of now, I've only found comparable firms for Facebook (which are Google, Apple, and Microsoft), but I have all the data for the other firms, so I don't envision my work being too much in respect to that. I can get that done by Thursday, and that gives me a week and a half to begin my multiple analysis, which should be ample time given that it only involves comparing only a few numbers (only the range of the 50's, rather than the hundreds I've had to deal with up to now.) The big problem that I now am seeing for my firms is in respect to the comparable firm group itself. This problem really only surfaces with Facebook, but it may possibly have a big impact on the results of my study.
Essentially, the problem is that there are incredibly few firms like Facebook that are wildly successful, or at the "mega-capitalization" size. This essentially means that the number of comparable firms that I have to choose for Facebook is dramatically decreased. In fact, Google, Apple, and Microsoft are the only eligible firms at Facebook's level. I could potentially consider firms with fewer assets than Facebook, but this difference starts getting big very quickly: in nearly the 200 Billion Dollar range. I think I have found the very first limitation of my paper: that companies which are wildly successful are very difficult to have prices that are easy to predict because of the few comparable firms that they have. Although none of my other firms have assets as large as Facebook, and have comparable groups in the hundreds, I fear that this data may not ultimately be applicable to Snapchat. Snapchat's IPO has been valued in the 25 billion dollar range, something which is already incredibly high. Ultimately, I think I'll have to wait and see how the comparable firms for he other companies turn out, but I'm not too hopeful for the future.
This result could point to something more intrinsic to the social media industry for the future, however. Perhaps, because of these large social media firms already attracting consumers, there is such a large barrier to entry to the industry that only uniquely special, large firms that are difficult to value can enter the industry.
Either way, it seems like I have a handful ahead of me when analyzing my results. (495)
Signing off,
Akash
Hey Akash! It's been really exciting reading over your blog and learning about your project! Also, congrats on finishing the second trimester and your data collection. It sounds like your project is going really well so far. I definitely think that the intrinsic conclusions you were making at the end of this post seemed meaningful, even if they are different than what you expected. How are you planning on dealing with Facebook then if it is not applicable? Will you take it out of your question and justify why it is too far out of range?
ReplyDeleteAkash, it seems like you have a really great handle on everything, especially with finishing your data collection! From what I can gather, you're pretty on top of what is changing in your project. Make sure to keep in mind any limitations that you encounter, so you can factor it into your conclusions and everything. But it's ok to have limitations like this! I agree with Grace in that you should definitely think about how you're going to justify this in your paper, starting now, and maybe modify sections based on that, but I have full faith that you will figure this out! I can't wait to see more updates on your project!
ReplyDeleteAgree with Daphne -- keep track of the limitations you're running into now so the later part of the paper will go smoothly.
DeleteHey Akash! Nice job getting your data collection done already! It seems the problem you are facing (correct me if I am wrong) is that Facebook's asset value is so great that it is limiting you from looking at smaller (but rising) comparable firms? This is actually a fairly large limitation, but I can think of a way you can try and get around this. Instead of valuing Facebook's comparable firms at the current asset and stock valuation, would it be possible (once again this could be totally off so correct me if I'm dumb) to compare Facebook with other companies at a prior time? Like maybe a few months after Facebook became public and compare it with newer, yet smaller, firms as they become public? I understand that the counter argument here would be that they truly are not comparable firms today but you could try and make the argument that they were comparable at a certain stage and go from there. I don't know if this helps or creates more problems, but it was just an idea I had while reading your post. Worst case its definitely a limitation you would have to address. At least you have three other comparable firms though, and I'm super excited to see where your project goes!
ReplyDeleteI don't think that'll work, as the whole point is that he's valuing firms at the specific time to reflect how that specific market (in industry and time) would react to the IPO. I may be misinformed, but I think that's correct.
DeleteAkash -- it sounds good, but I still think you're not writing this for a lay audience of blog readers. Try to make it more understandable. I found myself rereading several times to understand what you were saying.
ReplyDelete