Related questions
Sometimes something is worth more to you than you can get for it. But why would anyone think it is worth less than you can get for it? If people are willing to pay $45-$51 why would you think it is worth less than $34? That makes no sense.
Are people just voting to manipulate how a claim resolves? This makes little sense to have a poll such as this.
@ChristopherRandles its a preference thing, people can think tesla is overvalued even though it can be sold at a high price, right?
@strutheo They can think Tesla prospects are poorer than some people think and therefore not want to hold any shares at current price. But it is actually worth what you can get for it, if you are being sensible/rational.
@ChristopherRandles thats basically what i interpreted this as, "do you think it is over/undervalued compared to what other people think", otherwise there is no real question to ask here. how else could this be phrased?
@strutheo 99.9% of people don't own shares in Reddit so they are not prepared to pay for them so they may think it isn't worth holding them at current price $49.73, but if you offer someone who is very pessimistic on reddit's prospects whether they want some shares they can sell for 49.73 or $35 I think you would find they would almost all chose the shares and immediately sell them. In other words they are acting more like they are worth what they can get for them and at a lower price of $35 or $34 they are undervalued.
I am not sure whether it would make any difference to phrase it differently as I am not sure of the motivations for the 80% giving a silly answer. Not sure you would or should agree to phrase it as:
Would you prefer to receive one hundred shares in Reddit or $3400 given that you could, if you wish, sell the shares for the current price accessable via
https://www.google.com/search?q=rddt+nasdaq+share+price&rlz=1C1VDKB_en-GBGB929GB929&oq=rdd&gs_lcrp=EgZjaHJvbWUqCAgAEEUYJxg7MggIABBFGCcYOzIOCAEQRRg5GEMYgAQYigUyBggCEEUYOzIUCAMQRRgKGDsYgwEYsQMYgAQYigUyBggEEEUYPDIGCAUQRRg9MgYIBhBFGDwyBggHEAUYQNIBCDI3NzlqMGo3qAIAsAIA&sourceid=chrome&ie=UTF-8.
@strutheo I interpreted the question as “if reddits share price was $34, would you buy it, or short it” and not “would you take $34 in cash or a share of Reddit”, since the latter isn’t a very interesting question.
At the same time, I’m still surprised so many people said overvalued. I don’t have any special information or insights on Reddit, so I deferred my judgement to the market. The price shot up, so it seems that 34 was too low, so I voted for undervalued. Anyone saying that 34 is overvalued must either have a key insight that tells them Reddit is worth nearly half of what the professionals think, or is just voting on vibes.
@TonyPepperoni "if reddits share price was $34," that would be a completely different situation to the situation we actually are in where there are sufficient willing buyers are willing to pay $48 to match the willing sellers.
"Initial share price" clearly refers to the price Reddit got not to a hypothetical if the share price was $34 which isn't the current situation.
@ChristopherRandles @TonyPepperoni i did mean 34$ when i said 'initial share price' because it was not known at the time, for what its worth
will wait to keep thinking/discussing before i take action
@strutheo Yeah - I think it’s fine to say it’s “fundamentally” undervalued at a price below the market, but the market price is a pretty strong signal when forming an opinion
@simoj maybe the poll came too late , we really didnt have much time between the announcement and ipo
I don't see much of an issue, other than the original market says the poll will be after the market closes. We're all voting on what you said we'd vote on.
@Eliza @strutheo
Indeed Chris is doing what he said - finding out what people think.
It is just that overvalued is a crazy answer. You can sell if for $47 but people including Eliza think it is overvalued at $34. Crazy, (if you don't like the look of reddit's prospects it is still worth what you can sell it for) but if people think that, that is the question.
If they were voting that to manipulate another market to make a mana profit, I could understand why but that doesn't seem to be the case.
[No mod hat on]
🤣
I looked up the info before I voted and it says Reddit is valued at several billions of dollars for a website where you can't even read the comments in order, is terribly slow, and just unpleasant to use all around. Nothing makes sense. Happily voted Overvalued. I didn't even participate in the linked market 🤣
Meanwhile, Manifold wishes to be a company worth 1 billion dollars. Make your guess how I would vote on that one.
@Eliza
https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards/english/2022/issued/part-a/ifrs-13-fair-value-measurement.pdf?bypass=on
Application to non-financial assets
Highest and best use for non-financial assets
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
You are clearly looking at a personal subjective low value in use and not considering the higher possible sale value, which should be considered and the higher value chosen as the fair value.
If people want to ignore financial reporting standards in what they consider to be "value", they can do so.
So I am not going to argue, but you are wrong to say overvalued.
@ChristopherRandles ok wait - what is the term that i should use if i think someone's stock is valued too high
maybe this is just semantics of a lay person vs a trader, idk
@strutheo Since the question to be addressed is "Will Manifold think Reddit / RDDT 's initial share price is overvalued (too high)?" I think you are right to use overvalued.
Maybe it is lay person vs trained accountant
If you didn't want fair value which takes higher of value in use and resale value then you could use something like (or a subset of) 'personal subjective value in use by yourself'
But these could be wildly different, subjective and not at all approaching something more objective like fair value.
@strutheo heh I just having similar thoughts and was going to use TSLA as an example too.
Like, if there was a poll here for "is TSLA overvalued at the current price of $172" and answers were trending towards YES, if the price of TSLA increased during the course of the poll (assuming nothing fundamentally changed about the business), I don't think people would be using a price increase as conclusive evidence that the old price was undervalued
@ChristopherRandles The hypothetical of being given a share at $34 to sell at current market price has nothing to do with it. This isn’t what overvalued means to anyone.
There are lots of things sold at high prices that I wouldn’t pay half the price for. I could call those things overvalued or overpriced. Because I wouldn’t pay the asking price to buy them.
Analysts literally publish notes saying a company’s shares are over or undervalued.
By your logic no liquid asset can ever be over or undervalued which I don’t think many people would agree with.
@voodoo Yes people do use overvalued like that when they really mean they expect it to underperform in the future from its current price.. So if asked about at the current price of $55 do you think it is either overvalued or undervalued without a choice for about right, then I could understand a majority perhaps even a large majority of people saying overvalued. But there is a big difference between $34 and $55.
However the question is not about current price it is about whether it was overvalued at $34 when we can see all of its trading (excluding reddit's initial sale at $34) is between $45 to $59.
So what is it worth? What you can get for it, which is clearly more than $34. Perhaps the overvalued wording can be taken as more like do you expect it to underperform from $34 than what is its current fair value. But even so ignoring the large difference between current trading price which is one thing we do know and the $34 in favour of some highly subjective so very uncertain expectation of possible future returns from holding the shares seems weird to me.
@ChristopherRandles All shares are valued based on the discounted price of future returns and it’s precisely in the disagreement about those future returns that different people will arrive at different values or target prices for any given company and its shares.
If you look at Reddit’s financials it’s actually not that good a business. Its “brand” or “cred” is a lot better than its ability to generate profits.
Coincidentally it went down 10% today. And here is some random analyst’s opinion. There are strong arguments that Reddit the company isn’t worth its $8B market cap it’s trading at today.
Research firm Hedgeye initiated Reddit as a new short idea on Wednesday, with analyst Andrew Freedman stating the hype is "starting to wear off." There is roughly 50% downside to the stock based on its original IPO price of $47, Freedman said.