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Comment by akavi | Hacker News Reader

48% discount from peak valuation (95 G$ in Mar 2021). Ouch.

To be fair, 30 year treasuries have fallen almost as much. Did Stripe's valuation drop, or did the long-term value of today's cash increase?

Doesn't the long-term value of today's cash move in the opposite direction of the inflation rate?

I think they’re referring to net present value of future cash is determined by the difference between interest rates and inflation discounted over time. As inflation has gone up so have interest rates. Cash today is worth more in the future, especially if inflation is tamed and you locked in a good interest rate on a long dated bond.

Sort of. The value of companies is (meme stock speculation notwithstanding) the net present value of their future cash flows; for startups that tends to be far into the future cash flows. It's only natural that the price drops when interest rates go up.

But that's due to noncash instruments having higher-than-previously nominal yields. The long-term value of cash is unaffected. (Except to the extent that the higher opportunity cost of holding cash lowers the value of cash.)

This is about the opposite of long-term value, it's about the value of cash right now. This deal is mainly about letting Stripe employees cash out today, and high inflation means cash today is scarce/expensive.

> and high inflation means cash today is scarce/expensive.

High inflation means cash is abundant/cheap. That's what inflation means.

No it doesn't. It means cash is becoming more abundant/cheaper, i.e. it's scarce/expensive now compared to the future.

OK, I see what you're saying.

But I don't see how this can be an explanation of Stripe's nominal value now being lower than it was in the past - inflation between the past and now means cash is cheaper now than it was then. This looks more like an explanation of Stripe's value now being lower than Stripe's value in the future?

Stripe's value now is, very roughly, the expected value of its future dividends, and the amount of expected inflation between now and when those get paid is much more than the amount of inflation that's actually happened in the past few months.

95 Gazillion dollars?!?!?

"G" for "Giga", 1e9.

"giga-dollars" i.e. 1 billion dollars

I prefer to use gibi-dollars ($1073741824)

I read "Giga Dollars". To remove the ambiguity of Million, Billion, Millard, Long Million and Short Million perhaps.

Hmm.. but there's no ambiguity in "billion"? There's certainly less than in "giga dollars"

Billion is different in Short (10^9) vs Long (10^12) scale.

See: https://en.m.wikipedia.org/wiki/Long_and_short_scales

The short scale isn't a thing in English or when talking dollars which is implied by the dollar sign in "$95 billion" and the fact that this is a US company

"$95 billion" simply means $95,000,000,000.00 and there's no ambiguity...

A thread on HN yesterday regarding Credit Suisse where this ambiguity came up. That thread was in English and was about US Dollars.

Are you talking about this comment? https://news.ycombinator.com/item?id=35152388

That doesn't read like anyone is actually confused over the meaning of "billion" , it seems like people are just speculating on whether this error is long/short scale confusion between languages. Personally, I think it was just a typo - there is no conceivable way that a billion CHF could ever be a million USD regardless of the scales used...

Apologies if you're referring to a different comment.

Inflations a monster

That's a fair point, but wasn't that $95B valuation based on an ~$500M fundraise primarily to the irish government (as well as, I'm assuming, any funds that had participation rights)?

I'm not saying it doesn't look like a bad drop in valuation, but it's not clear that the $95 valuation would have been supported by any larger.

Looks like they tried to time the market and failed. Smells like greed to me.

Steep haircut, but 50% of something still better than 100% of nothing.

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