A colleague pointed out this excellent article in the Financial Times recently by Richard Waters on the subject of the internet bubble.
There are lots of very good examples in the article of how tech companies are valuing themselves in order to look attractive to potential buyers. However the key word in that sentence is ‘themselves’ as there is a great example of self valuation around Groupon :
Applying Groupon’s preferred measure turned last year’s $420m loss under US accounting conventions into a $61m profit.
Does this lead one to believe that the laws of P&L accounting as we know it are being superseded in favour of something that looks favourable to the prospective buyer?
Where will it all end I wonder… time to invest in new tech stocks or time to buy scratch cards … are they both a lottery?