>There’s no way Oculus VR is worth anything like the $2 billion that Facebook is offering for it. The company has no revenue, no product on the market, and an unproven technology.
Many keep repeating "there is no bubble", but it is hard for me to believe. The party has to end sometime.
I don't necessarily disagree, but of all the high valuations these days, Oculus strikes me as one of the least offensive. Nearly everyone who has used it has described it as potentially revolutionary. They have a huge lead on competitors, and I'm guessing they may have some patents on key innovations.
He's wrong about Oculus having no revenue: they've sold about $27million in Dev kits and DK2 pre-orders. The writer suggests a valuation of $20million, but didn't even do any research.
What he says at the beginning about the reason inflation is low despite low interest rates being a game of trust is pretty odd-ball as well.
One thing thing that is inflated is Forbes-blogger pagerank, due to Forbes smothering a bunch of crappy blogs in pools of their magazine operation's pagerank.
(I think the Oculus valuation might be high because I don't know of any exclusive patents, etc. they hold. But, both the Anderssen round of investment and the Facebook buyout were supposedly in response to a prototype that hasn't been revealed yet. If they have integrated foveated rendering in a proprietary way, etc. they could take a huge lead as VR explodes)
Oculus does have a real, physical, available product - I've used one personally that my friend bought (albeit through the kickstarter page). There are definitely people who are interested and it actually worked relatively well. Maybe it won't catch on, but I don't think it's absurd like many other tech start ups.
Plus, they weren't bought for $2 billion. They were bought for $400 million in cash and the $1.6 billion in FB stock which is quite a different thing. If you believe that FB is overpriced, then they were really bought for a lot less than $2 billion.
Having a functioning prototype that is good enough to sell is a massive hedge against failure. Even if the company flops, the tech is going to be worth _something_ substantial. This is in contrast to a device that exists on paper only: concepts are useful, and engineering has value, but without an physical device there are a lot of reality checks left.
It's the hardware equivalent of ideas are cheap, but implementations are where real value lies.
Oculus really is the wrong company to use to prove we're in a bubble. By most accounts, it's the first good implementation of a technology that we know is going to be huge in the future (see every scifi world ever). Of course it's a risky investment, but the potential payoff is undeniably huge
Sure, the party will end, but how the heck is that going to turn into consumer goods inflation? What "trust" is he ranting about? How is AirBnB going to make chicken unaffordable?
There's no bubble, just way to much money floating around and nothing interesting to buy. Supply of money vastly exceeds the amount of worthy investment vessels. An if you can get a good return at least get lousy return (or none at all) with very small chance of getting awesome return. What are you going to do with your bazzillion dollars? Buy a hotel chain? Another one? Give me a break!
The party won't end until interest rates return to natural levels. Until then you're going to have a tremendous amount of volatility and a market continuing to grow faster than GDP.
Yes, at some point between now and the heat death of the universe, the stock prices of technology companies is very likely to go down. This is not only information-free, it's also not a contrarian opinion.
Many keep repeating "there is no bubble", but it is hard for me to believe. The party has to end sometime.