Ask HN: What companies are most likely Theranos of 2020? | Hacker News Reader

Ask HN: What companies are most likely Theranos of 2020?

13 pointsbndr26 comments

I have recently watched documentaries on Theranos and Fyre Festival. It was quite interesting to know that people knew that it was a fraud much earlier than it came to light.

What do you think are other possible "Theranos" out there?

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There needs to be a documentary on Juicero. They didn't lie and cheat like Theranos and Fyre Festival, Juicero just a really silly business model... Which is somehow just as scary

If anyone wants an in depth primer on their products youtuber AVE did a tear down on their machine.

https://www.youtube.com/watch?v=_Cp-BGQfpHQ

From my perspective I think one is WeWork - shady practices, shady CEO, custom metrics to valuate the company.

WeWork imploded in 2019 - so that proves your appraisal. Didn't have to wait for 2020.

WeWork was a business failure but not a fraud. Basically it was yet another money-losing startup, but one which went too far.

Another interesting fraud I read about is OneCoin, they raised about 4$ billion [1] until 2019 and the creator of oneCoin disappeared. They were positioning themselves as a cryptocurrency which ended up being simple a ponzi scheme. `Cryptoqueen` podcast sheds more light on the story.

[1] https://en.wikipedia.org/wiki/OneCoin

Most cryptocurrencies I've seen look like a scam and the majority of them end up being one.

Magic Leap? Haven't heard anything from them yet.

AFAIK they did deliver a product to the market, don't know how good it was though.

https://www.theinformation.com/articles/dented-reality-magic...

From an investment valuation point of view, any company whose shares are being traded at more than say 12 to 15 x dividend payments has people owning shares who are hoping that they will find an even bigger fool to pay for their shares than they did.

Just have a look at the SEC filings for whichever companies you are interested in and see for yourself. You won't have to look for long.

Why 15 x dividend payments? A growing company should probably be spending those on growing anyway?

Basically, 7+% dividend yield is really good because if the dividend is sound, the risk-reward ratio is better than investing in a growth company not paying a dividend. The market should be bidding up the price of the stock to bring the yield in line with typical yields. Since that isn’t happening, there is a risk that the market is pricing into the stock, either that the dividend will be cut or that the company may become insolvent.

There are high yield opportunities that are safer than others, but that is the general principle to use when analyzing unusually high yields.

I don't think any startups or any recently IPOed companies are paying dividends. Also doesn't this count companies like Amazon?

A lot of big name companies don't pay dividends. Berkshire Hathaway is a notable one. They have only paid a dividend once, in 1967[0].

[0] https://www.investopedia.com/ask/answers/021615/why-doesnt-b...

Dividends are not a great metric for valuation. There are companies that are operating at a loss but still pay a dividend. Dividends aren't the only way that companies can reward shareholders. Share buy backs tend to be more tax-efficient than dividends.

Outside of oil MPs or Real Estate REITs I'm having a hard time finding any company with a dividend >6%

I will say I agree with your overall thesis that investments should be some function of expected future cash flows

Quibi - they raised a billion (according to the media) before launching anything,and a video I can rotate doesn't sound like a revolutionary new form of media or art.

Whichever startup the well know adage "if it sounds too good to be true, it probably is [too good to be]" applies to.

The Fed

Airbnb.

Uber.

I was amazed by how much money they lose with Uber Eats[1]. How much longer is that sustainable and will prices need to increase dramatically to even break even?

[1] https://qz.com/1693843/uber-eats-will-lose-money-until-at-le...

I hope they go down in flames. Destroying-local-economies-so-you can-get-rid-of-competition-and-raise-prices-as-a-service is unacceptable.

Apart from their Uber-unethical, sexist and exploitative culture.

Or maybe drivers finally get classified as workers and form a strong union, but before self driving technology :)

Unions are for the lazy.

Drivers should not be classified as employees.

Uber might lead the charge for drivers to start unionizing. Could you imagine trying to pull off what they pulled off with a powerful ride-share driver union?

Uber has many flaws but comparing it to Theranos is too extreme and frankly unfair. Theranos cheated, lied and covered up for a product that never existed. Uber helps many people on both sides even though it has added some headaches of its own.

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