When I was getting my MBA at SCU, one of the assignments was to estimate the correct "fundamentals price" of various company stocks and what cash flow would be required to sustain that stock price.
The technique is simply: the current stock price is the NPV (net present value) of future revenue cash flows. Because of the effects of discounting, you only really need to go 10-20 years into the future (the present value of future money approaches zero as time goes to infinity but it's already effectively zero at 10-20 years).
The simplest solution is to assume constant revenue into the future so each each for 10-20 years is, say, $1M and that gives you a NPV that depends on an effective interest rate.
But a start up starts at zero revenue at day zero and must increase that revenue and generally markets require exponential growth (which is what "X% growth" announced each year actually means mathematically - non-exponential growth would be 0% growth per year by mathematical necessity). So you have to give an "interest rate" of growth as another parameter in your estimate.
How big is that? Well isn't NOT 5%, 10% or even 15% or 20%. Because if you wanted modest ROI like that, you'd NEVER invest in startups at all. You could invest in consumer credit card companies instead.
No. You need 30%-100% growth per year of ACTUAL money revenue. Which is what makes startups so great for founders if they do well. The ROI is enough for everyone involved but more so for founders. In Silicon Valley's past, this was possible even with hardware. But in the 90s it became passe to require or expect that apparently.
So what about Dot Com and later internet startups? Well, we did the analysis on Amazon back in the day and to justify their THEN stock price, you could set revenues growing at 100%-200% per year for the entire 20-30 year event horizon of the analysis AND STILL NOT COME CLOSE to justifying the stock price at the time.
Fast forward to 2022, and note that companies like Twitter are still not profitable or having revenue growth levels to sustain its even now depressed stock price. The wrong lesson is to say that "Obviously fundamentals pricing doesn't matter" - instead it means they current wishful thinking of "animal spirit" pricing is dangerous.
The main reason for the discrepancy is these irrational exuberance pricing driving the price: these are "value stocks" (as long as a bigger sucker, I mean buyer, can be found) BUT they are NOT investing in ANYTHING that can build greater revenues in any effective way. The problem is that the South Sea Corporations and Tulip markets were exactly that as well.
The poster child for this lack of fundamentals is WeWork, which was NOT EVEN a growth tech play (with Moore's Law based value multiplication) but simply a real estate business no different from any REIT or property management business (fixed size pie) AND had anti-fundamentals (risk creation and wealth destruction at its core) baked into them financially in their core business model. But if you say "Moore's Law" enough times.... you get a Cargo Cult of delusion.
Twitter and most other internet players are effectively similar in that it has no real value creation but plenty of risk-creating features to its business model with a high operating cost. And now even Amazon is floundering in many ways with it only sustained by its prior destruction of competitors.
The Achilles heal of destroying your competitors is there are circumstances when customers will simply say no to buying what you are selling _without direct product substitution_ or by having them completely changing their economic allocations and choices entirely outside the market. That's already happening thanks to economic destruction and inflation - when people cancel Netflix accounts, often they are NOT substituting another streaming vendor - often they are changing what they do with their time!
If these companies ACTUALLY provided value, they'd have some immunity to economic downturns if they were truly essential. But they are weak financially and they are far from essential so the result becomes dire. AND DESERVED if you haven't been focused on the fundamentals due to unethical get-rich-quick schemes and political distractions. Having "good times" for too long has also made them "fat, dumb and happy" and destroys the instincts and even core knowledge to insulate themselves to the current reality.
That was the VALUE of cyclic economies pre-1980 - bad times forced to you remember and learn how to prepare for that reality. Just one of the many reasons why eliminating business cycles causes more harm than good.