Such a weird sentence. The correct causality should be: It's valued in the hundreds of billions because the investors expect a 1300% revenue growth.
Another example is how Isaac Newton lost money on some other bubble as well: https://www.smithsonianmag.com/smart-news/market-crash-cost-... [ The market crash which cost newton fortune]
So even if NEWTON, the legendary ISAAC NEWTON could lose money in bubble and was left holding umbrellas when there was no rain.
From the book Intelligent investor, I want to get a quote so here it goes (opened the book from my shelf, the page number is 13)
The great physicist muttered that he "could calculate the motions of the heavenly bodies, but not hte madness of the people"
This quote seems soo applicable in today's world, I am gonna create a parent comment about it as well.
Also, For the rest of Newton's life, he forbade anyone to speak the words "South Sea" in his pressence.
Newton lost more than $3 Million in today's money because of the south sea company bubble.
Intelligent investor is a great book though.
[1] eg he wrote more than a million words on alchemy during his lifetime https://webapp1.dlib.indiana.edu/newton/project/about.do
That covers everyone. Especially and including the rationalists. Part of being highly intelligent is being a bit weird because the habits and beliefs of ordinary people are those you'd expect of people with ordinary intelligence.
Anyone involved in small-time investing should be considering that they aren't rational when setting their strategy. Larger investment houses do what they can but even then every so often will suffer from group-think episodes.
The norms of "rational" science hadn't really been established yet. There wasn't really a clear line drawn between alchemy and what we would consider chemistry today.
Newton was also definitely in favour of an empirical/axiomatic basis for science in general. If you read principia he proves almost everything[1] and of course he famously deformed his own eyeballs with wooden gadgets to do his experiments in optics.
[1] In fact pretty much the one thing he doesn't prove is the calculus, which Alex Kontorovich once said in a lecture on youtube that he has a pet theory that the reason that Newton never published the calculus was not the one everyone says about his rivalry with Hooke etc but that he wanted a rigorous proof first (which of course didn't come about until much later with Cauchy, Weierstrass, Dedekind etc for normal calculus and the 1960s for non-standard analysis to prove Newton's fluxions rigorously).
The moral of that story is that being a legend or smart doesn’t count for much in investing.
That is a cost of capital estimate of 40%.
Which points to investors not believing the company will be that profitable.
I am not saying investors don't think they will be profitable just they certainly don't believe that profitable.
The marginal investor does.