Quick look at financials, they lost $25M in trailing 12 months, lost $14M in the previous year, lost $10M in the year before.
How is Duolingo supposed to become profitable?
How is a $6.5B valuation justified?
How is Duolingo supposed to become profitable?
How is a $6.5B valuation justified?
2. They had positive free cash flow of $14M in 2020, which may be a better metric to look at when assessing their financial health.
The company is ten years old. I would have to imagine almost zero companies lose money ten years in because they literally do not exist anymore.
Palantir is a dumb shitty company that will file for bankruptcy. Unfortunately the VCs have already dumped it on to the dopes on Wall Street bets.
Current Palantir Technologies Probability Of Bankruptcy = 24%
I think VC funding makes IPOs a bit more confusing. It makes sense to IPO, if you need to money to boost your business. Duolingo needs money to update their app, so they can use the IPO to fund it.
The problem is that if you’re VC funded it now looks like the VCs have lost faith in the company. They paid for the bill for ten years and now they won’t help push the company into profitability? That makes an IPO look like an exist strategy.
Every IPO is an exit strategy or a refusal to run a balanced budget. If you have cash flow you can invest for free and compound the growth internally. If you have responsible financial management you can tap the bond markets for basically free.
VC's want a 10 bagger - they have had it and more - is Duolingo going to be valued at $65B in a couple of years? I doubt it.
... why are companies still getting a pass with this 10 years in? No, this isn't an acceptable excuse here.
Whether or not this company makes sense, there are plenty of companies that have been losing money at this stage and ended up working out. (Plenty that didn't too)
And the question is whether those “plenty of companies” were valued at 6.5 BN.
Because a lot of these companies seem to be doing the underpants gnomes business strategy, as in 1) Register a bunch of users 2) ??? 3) Profit
Isnt the second step, show Ads
https://venturebeat.com/2008/04/24/one-small-step-for-myspac...
"Balance sheet is red" is about the only thing they can understand about an IPO, and thus they comment about it.
This is the most retarded silicon valley vc tech bubble comment I have ever. There are 11million companies in the US, many will fail making money let alone being 'strong' companies that drop $10 mil a year.
If the numbers are so great and they have so much money at hand why are the people who run the business selling some of their share? Possibly due to high market valuations of all kinds and a very attractive price to dump a well established business that you have milked the most out of to date?
Even if the IPO didn't pop as much people would still probably be selling because their equity has likely been illiquid for years, especially if they were a founder, early investor or early employee.
So 3.7mil shares were issued at $102, and opened at $140, so that is a 'cost' to the company of $140 million + underwriting fees etc (probably another $30mil + the 700k shares they have options on at issue price). Additionally insiders dumped out 1.4mil shares at the issue price.
Now execs + VC's have a 'liquid' market to sell or short against without paying the high costs for goldmans to price you up a private hedge which is the whole point of an IPO.
Its litterally writting into the offering - 'The principal purposes of this offering are to increase our capitalization and financial flexibility and to create a public market for our Class A common stock.'
Even if you completely believe in the future of the company, locking in returns and getting some liquidity (Even if the stock didn't pop heaps) would be nice for people who have been illiquid for years.
Those that locked in their returns, recieved the proceeds of thier 1.4million shares of $142.8 million into their accounts just before the bell rang for the market open. The bell rang everyone cheered and the shares they just sold are worth $196 million. Regular joe with a robin hood account makes the money and the CEO/VC loses money ... who knows more about the company though?
> Even if you completely believe in the future of the company, locking in returns and getting some liquidity
Worth it if you get $10 a share instead of $100? All about value. Why not dump some out in the previous 8 funding rounds? The reason is not many VCs would be in there cashing out the guys from the previous rounds, or would only do so at a heavy discount or to gain control over the company.
That is what I meant by "surprised", though in hindsight my choice of wording was poor.
I switched to being a paying subscriber once and the experience was more or less the same as being a free user with the aid of an ad-blocker. Enough said.
The way these arguments are usually phrased doesn't do the company justice. Amazon "lost" money for decades because they were building giant and ambitious infrastructure, not setting burning in on executive parties.
Just keep burning through investor cash until you're acquired by a bigger corporation. Then a year later they announce that they're killing your company because, surprise, it couldn't turn a profit.
Somewhere a rich stock owner makes a huge profit. Everyone's happy.
The hope is to make a locked-in user base and a captive audience.
They are probably hoping to create various sorts of "attachments" between users and their "achievements" to drip revenue from users through either premium accounts or ads.
I'm sure they'll be profitable in a decade...
Also don't forget this is an IPO: ideally you want to overstate your value.
My biggest concern would be how much of the growth was from people having free time at home due to covid. And if deep learning will make language learning less relevant in the future. You may be less likely to learn a new language if audio can be translated in real time almost perfectly