Cryptocurrency Valuation

Yes, cryptocurrencies do not fit in very well into the traditional discounted cash flows, comparables, asset base and precedents models for valuing an asset.

Normally, by valuing a company, you are "valuing" the future. 

And Bitcoin and other cryptocurrencies are actually the future, as far as I am concerned.

Bitcoin and cryptocurrencies are the new way to store, account for and transfer wealth.

Away from the hands of governments.

The blockchain algorithm will change, upend, disrupt everything we know.

Why am I so optimistic on cryptocurrencies?

Because cryptocurrencies save people effort, in other words Bitcoin and other cryptocurrencies make humanity more efficient.

I forecast Bitcoin's price will surpass 200 000 USD in 10 years time.

Other, more obscure cryptocurrencies are a leveraged vehicle on Bitcoin and should rise more multiples that the main cryptocurrency.

GitLab Valuation As a IaaS Cloud Computing Market Disrupter

GitLab, the cloud code repository and collaboration service is currently valued at 7.2 billion USD.

GitLab, if it is able to win, let's suppose a 5 % market share in Infrastructure as a Service, IaaS cloud computing could be worth around 270 billion USD in 10 to 15 years time.

Cloud computing, with its more than 100 billion USD yearly revenue run rate is the most exciting market currently, which, according to my estimates could top 500 billion in revenue in 12 years.

IaaS is the largest segment of the cloud computing market. 

If GitLab wins a 5 % market share this would mean 25 billion USD revenue and not less than 5 billion USD profit in year, if one applies a net profit margin of 20 %. Currently, cloud computing is more profitable even.

In this case, GitLab's intrinsic worth is around 270 billion USD in 10 to 15 years, in my personal opinion. 

Short Comments On Elon Musk's Companies

Tesla is worth around 120 billion USD and that is the value of the electric vehicles technology.

Twitter is undervalued. I estimate Twitter is worth 100 billion USD or more than double its current market capitalisation.

SpaceX has limitless potential actually, if managed well.

Snowflake Valuation. 4 June 2022

 

Snowflake Inc., the cloud-computing based data storage and analysis company is currently valued at approximately 41 billion USD.

I estimate Snowflake's intrinsic worth is 100 billion USD in five years time and 200 billion USD in 10 years time.

My assumption, of course is that cloud computing will continue to develop and grow exponentially and that governments will not forcefully force a slowdown in cloud computing, arguably the most exciting market of our time.

I also assume that Snowflake will have around 14 billion USD in revenue and will make 4 billion USD profit a year, 10 years from now. And Snowflake's revenue will still be growing at more than 10 % a year in 10 years time.

So if one applies Price/Earnings multiple of 50, which is reasonable compared to multiples previously applied to Amazon and cloud computing's yearly revenue of more than 100 billion USD currently and projected prolonged period of above 10 % cloud computing revenue growth, this gets Snowflake's market capitalisation to my aforementioned estimate of 200 billion USD in 10 years time.

Warren Buffett's Berkshire Hathaway has invested more than 1 billion USD in Snowflake Inc.

And yes, I agree with the Oracle of Omaha, a nickname for Warren Buffett.

Clout computing is the future.

Cryptocurrency Valuation. Bitcoin Valuation

I think Bitcoin's price will be more than 200 000 USD in 10 years time.

On average cryptocurrencies' prices should rise more than five fold in 10 years time.

Crypto is disruptive because the government cannot get its hands on it, security agencies cannot track it, cryptocurrencies serve as store of wealth, in the mid term at least, cryptocurrencies can be used as an unit of account and crypto is a means of exchange.

In addition, Bitcoin and other cryptocurrencies' underlying blockchain algorithm is arguably the greatest innovation in the last twenty years. When implemented, blockchain will change almost every industry and area of modern day life.

GitLab Valuation. HashiCorp Valuation

GitLab's market capitalisation could increase ten times from current levels in 7 years time.

HashiCorp's market capitalisation could rise 7 times from its level now.

Cloud computing is the future. The firms that embrace it and are nimble, agile, innovative and move fast developing it will be worth more than 100 billion USD soon.

GitLab's open source approach is a case in point.

Bitcoin and Cryptocurrencies Will Disrupt Investment Banking And Venture Capital

Bitcoin and other cryptocurrencies will disintermediate the investment banking services now provided mainly by the five largest Wall Street investment banks, namely JP Morgan, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup as companies will be able to issue their own cryptocurrencies connected with a certain project or cash flows.

In addition, venture capital funds will also lose their positions as the main financiers for young, predominantly technology firms. As these tech startups will be able more easily and at a lower cost to finance their projects and endeavours.

The above developments, of course, will foster the creation of new finance and investment banking startups, many having Bitcoin, cryptocurrencies and blockchain at their core.

In short, a new golden age for financial entrepreneurship is slowly emerging.

And finance and technology, hand in hand will lead to new welfare creation throughout the world and foster a more just, fair and affluent society.

Bitcoin Valuation. Cloud Computing Valuation

In my humble opinion, Bitcoin will be worth more than 170 000 USD in ten years on blockchain efficiency, money transfers disruption of banking and the blockchain created business efficiencies.

Many of the cloud computing stocks that are down more than 70 % from their recent peaks will more than recover from the lows.

Cloud computing, as far as I am concerned will become more than 700 billion USD yearly revenue market 12 years from now.

GitLab And Open Source. Cloud Computing Disruption

Cloud computing is arguably the most exciting, but also one of the most difficult markets to break into of our time.

Cloud computing is one of the most promising markets, because cloud computing already has yearly run revenue of more than 100 billion, is growing by more than 20 % year on year and cloud computing shows the promising of basically becoming computing as we know it. Soon everything will be in the cloud including productivity software, entertainment, games and films and also data storage and analysis will be done in the cloud.

And most importantly artificial intelligence or AI is already heavily done via cloud computing.

The market of cloud computing is arguably the most difficult to break into since it is dominated by Amazon, Microsoft and Alphabet, Google's owner. Not long ago these three companies had market capitalisation of around 7 trillion USD!

Now Amazon, Microsoft and Alphabet's combined market capitalisation is approximately 4.5 trillion USD, which is staggering amount.

It is a classic David versus three Goliaths battle.

GitLab, a relatively new and small technology company has built a code repository and cooperation service using open source, thus attacking the Infrastructure as a Service, IaaS segment of cloud computing, which is by far the largest in terms of revenue part of cloud computing.

Only via an innovative and niche approach can the three technology giants Amazon, Microsoft and Alphabet be successfully challenged. GitLab is trying to do that. And the open source approach of utilising the world's brains could well help GitLab succeeding, partially at least.

Bitcoin and Cryptocurrencies Provide Too Much Value Just to Go Extinct

Bitcoin and other cryptocurrencies provide far too many efficiencies for businesses and consumers for their prices to go down to zero.

Bitcoin facilitates payments for businesses and consumers, stores value for people and companies and the underlying blockchain algorithm provides huge potential economies of scale which are only about 5 % to 7 % utilised.

Cryptocurrencies issued by companies are a way to raise funds, which angel investors and venture capital funds are not capable of providing at the moment. At least, not at the current return on investment and the associated risk.

Bitcoin and cryptocurrencies are directly disrupting the commercial banking, investment banking and asset management industries and the blockchain algorithm has the potential to just change our world.

Open Source Coding Approach As Information Technology Disrupter

Open source software has long held the promise of displacing close source software production that is dominant nowadays via Microsoft's Windows and MS Office software and Apple's Macintosh computers operating systems.

Red Hat, the main open software corporation was valued at 40 billion USD at one point of its history.

Open source, however has not been able to live up to its promise, up till now.

R, Python, SQL, Android etc. are all open source projects. It seems the world is mature enough to accept that blue dyed hair techies or geeks called otherwise can actually serve corporations well.

Nobody minds the geeky Mark Zuckerberg, or at least all the major, sturdy, highbrow corporations of the world are tripping over themselves to advertise on the Zuckerberg owned and run Facebook software, part of Meta.

GitLab is trying to bring open source code to cloud computing via its open source code repository, collaboration, adaptation and ultimately high quality software applications output. It is interesting how the dominant mandarins of cloud computing, namely Amazon, Microsoft and Google Cloud, part of Alphabet corporation will react. Up till now the established corporations in Infrastructure as a Service cloud computing are largely ignoring the new open source competitor GitLab. 

History has shown via iPhone against Blackberry and Nokia, Google against Yahoo, Facebook against everyone else that this could be very dangerous.

It remains to be seen how things will come out.

Tesla's Market Capitalisation Is Falling Towards Its Real Intrinsic Value

Tesla's market capitalisation is 754 billion USD currently. 

In my opinion, Tesla's intrinsic value is 120 billion USD and this is the value of the electric vehicles production technology.

If one takes out government subsidies and in advance booking of advance small fraction payments of Tesla cars orders, Tesla is not profitable and with a negative profit margin in excess of - 10 %, according to my estimates.

If Tesla does not achieve a technological breakthrough, which enables Tesla Inc. to produce electric vehicles with a 5 % positive net profit margin at least, Tesla will go bankrupt.

Tesla is relying on China and the efforts of the Chinese government to reduce pollution which drives purchases of Teslas in China. However, now the tensions between China and USA are very strained and this source of revenue could well decrease or even cease off altogether if the Russia -  Ukraine altercation further destroys the US - China relationships.

Actually, Tesla seems to have a founder problem. As exemplified by Elon Musk's current attempt to buy Twitter, it seems Elon Musk employs some strange business practices. Many analysts claim that all what Elon Musk is doing is trying to sell his existing Twitter stake at a higher price. This is an unproven claim, I repeat.

If Tesla's stock falls too much, it may well not be a convertible currency with which Tesla can fund its growth. To put it short, Tesla will not be able to finance itself by raising new capital or take out margin loans if its stock price falls too much. Simply because Tesla is not profitable, that is it is burning cash.

In short, both Tesla and the Nasdaq Composite are way overvalued. If the Federal Reserve, however, stops raising rates the Nasdaq Composite will recover some of its lost ground.

Will Bitcoin Disappear?

No. I think Bitcoin will survive and thrive long term. Bitcoin simply provides too many efficiencies.

The underlying hashing blockchain algorithm will change our world.

I think Bitcoin's price will fall to around 17 000 USD before recovering.

We are living through a new 2022 dot com, first bubble, now we are witnessing the bust. And all this caused by the Federal Reserve raising interest rate levels.

GitLab Against the Giants Amazon AWS, Microsoft Azure And Google Cloud. A Short Analysis.

GitLab, the Infrastructure as a Service, IaaS cloud computing code repository service based on open source software is vying to win market share in IaaS cloud against Amazon AWS, Microsoft Azure and Google Cloud offerings.

The time proven way to fight against a stronger, at least optically, opponent is to outsmart the stronger competitor.

GitLab is employing the already classic startup strategy of targeting a niche - code repository which later could turn out to be the bedrock of cloud software production and thus take the cloud computing market by storm. A page rip out from the now classic startup bestseller "The Lean Startup" by Eric Ries.

The niche, develop, adapt as you go strategy was first most successfully deployed by Toyota Motor Company and also touched upon in "The Innovator's Dilemma" book by Clayton Christensen.

History, of course is full of examples where the "lean startup" strategy has not worked. But successful examples like Alphabet, Google owner, Amazon, Meta, Facebook producer, Snap, Snapchat's owner, even Netflix, which is now worth a huge 80 billion USD, even after falling 70 % from its recent peak make for legends and sprout many new startups started by ambitious young men and women.

I personally think GitLab's main advantage is the open source approach. Open source approach  increases to several degrees  the potential adaptability and agility of the company employing the open source software technology. 

The success of a startup challenger like GitLab often hinges on attracting brilliant employees, arguably most importantly brilliant coders. And it is an open secret that some of the most talented programmers are open source fanatics.

In short, as far as I am concerned, GitLab has many ingredients of a successful challenger of the establishment, even be it in a still briskly growing market like cloud computing.

GitLab's Open Source Strategy to Disrupt Cloud Computing

GitLab, the code repository and collaboration service based on open source code is an interesting attempt to break into and win a relatively large market share of an oligopoly like, large, quickly growing and very promising market like cloud computing.

Amazon AWS, Microsoft and Google Cloud are dominating cloud computing and especially its largest  segment by far Infrastructure as a Service, IaaS  where GitLab is offering its service.

I forecast GitLab could be worth 100 billion USD in 7 year time.

The cloud computing market is currently at a 100 billion USD yearly revenue run rate and cloud computing revenue is growing at more than 20 % year on year. And the net profit margin of Amazon AWS cloud computing offering currently stand at more than 20 %.

So the opportunities for a new, nimble and innovative entrant into IaaS cloud computing are enormous.

Open source software has up till now been shunned by large corporations. But R, Python, SQL are just some examples where bedrock programming languages are based on open source code writing.

GitLab is attacking a large market as cloud computing using a niche targeting strategy. This has worked in the past and I could see it working for GitLab. Organizations like NASA, Goldman Sachs, Siemens, Fujitsu are clients of GitLab, which is a testament in itself.

GitLab's classic lean startup, niche targeting, develop, change as you go strategy could actually work, in my humble opinion.

Will the Federal Reserve Raising Rates Destroy Bitcoin And Cryptocurrencies In General?

The Federal Reserve, the central bank of the United States of America raised its reference rate to 1 % target.

The Federal Reserve Federal Funds Rate is basically the interest rate of the the world. Since Federal Reserve regularly during crises provides swap lines to other leading global central banks like the European  Central Bank, Bank of Japan, Bank of England and the central bank of Switzerland, the Federal Reserve is in end effect the central bank of the world.

These EUR, JPY, GBP and CHF swap lines are nothing else then a promise by the Federal Reserve to give USD in exchange for EUR, JPY, GBP and CHF collateral  for the amount negotiated.

All other risk assets like technology stocks, Bitcoin and other cryptocurrencies are priced off the Federal Reserve policy.

No, the Federal Reserve, in my opinion will not destroy cryptocurrencies with its current policy of aggressively raising rates. Bitcoin and cryptocurrencies will stay because they save people and corporations time, effort and money. Bitcoin and the underlying blockchain technology provide efficiencies and economies of scale which ultimately helps people live better and longer.

And since all corporations are trying to maximise profits, the lower costs of production Bitcoin, the underlying blockchain algorithm  and other cryptocurrencies provide is a great thing to have. 

Barring an outright ban of cryptocurrencies issued by major governments, cryptocurrencies will not only continue to exist, but thrive long into the future, as far as I am concerned.

In addition, many new cryptocurrencies issued by small technology startups could offer competition to Wall Street banks which ultimately guide to a significant extent capital flows. In short, cryptocurrencies could potentially disrupt investment banking, that is IPOs, equity capital raising, debt capital raising and Mergers and Acquisitions.

And since Bitcoin and cryptocurrencies, via the hashing algorithm underlying the blockchain actually produce information  and share information, cryptocurrencies could disrupt Wall Street's research departments.

In short, cryptocurrencies provide too much benefits to just go dark. And in the future, they will provide cash flows via dividends. 

GitLab And Other Agile Startups Could Finally Provide a Way to Unlock the Value of Open Source

GitLab is an open-core, open source company that provides a git type code repository and collaboration platform and tools.

Open source code software has long held huge promise as evidenced by the Red Hat Company which at one point traded at Price/Sales ratio of 1 000 and 40 billion USD market capitalisation.

For one reason or another this potential has not been fully realised. Large corporations have typically not trusted the technologists with non standard looks, geeks in short, that prefer and develop open source based software. This has prevented open source companies from quickly scaling and thus becoming corporations valued at hundreds of billions or event trillions of USD like Microsoft, Meta or Apple.

GitLab is a ray of light that trail blazes the path for open source technology. Companies like Goldman Sachs, Siemens, Fujitsu and governmental organisations like NASA are already using GitLab which is a huge testament for GitLab's software product quality.

Actually, GitLab provides the core, the bedrock for software production, namely how to collaborate, integrate teams and ultimately produce high quality computer code. This makes GitLab an important player in the Infrastructure as a Service, IaaS segment of cloud computing. And Infrastructure as a Service is the largest segment in cloud computing which is already more than a 100 billion USD in yearly revenue run rate market. 

It remains to be seen whether GitLab's innovative open source approach will make bigger inroads into cloud computing and thus ultimately change the way we compute. As far as I am concerned, GitLab has reasonable chances of success in becoming one of the modern day's technology disrupters.