No. of Recommendations: 6
duma, here is an article with some ps ratios of various companies after they began trading, including bidu which had a much higher p/s ratio than 20.

All these companies that had huge ps ratios then continued higher we’re doing something unique. AMZN had a ps ratio of 19 when it began trading but most likely was growing revenue much faster than MDB is now.

At the same time, it was a reseller with razor thin margins. So it should be trading at a lower ps ratio than a software co.

I agree P/S ratios have more weight than this “rule of 40” nonsense but it too is infallible.

I do not have the answer how to value MDB. It is a unique company doing a unique thing in basically a new industry where how big the market is remains to be seen. I am more concerned with competition and adaption rates as well as growth rates than I am valuation. If we had any accurate way to forecast so many unknown variables obviously it would be easier. But we don’t. Unless you could tell what the market will be say 5, 10 years from now. And how much MDB will capture. Also with

I just feel like I’ve left a lot more on the table by not participating in “overvalued” companies than I have saved by avoiding them.

This goes for the stock market as a whole. One could argue the stock market is overvalued currently. It’s the same concept. Usually when the market goes down they get them all right? That would include MDB! But it’s recessions or fear of recessions that drive market indices down. Not valuations.

Don’t get me wrong this discussion did give me pause but I don’t have a better solution at this time. I’m not going to sit down and calculate what MDB will be doing 10 years from now to get a proper valuation any more than I’m going to calculate next weeks lotto numbers. I’m certainly not going to sell it and buy also rans trading at lower valuations because they seem to get whacked just as bad when they disappoint. Unless maybe until you get to consumer staples or very stable companies that grow 5-10% a year. Certainly not pvtl.

What do you think MDB could be doing 10 years from now? If it could be much bigger than its current 4.6 billion market cap/260m run rate 10 years from now, the important thing is to not disturb the position. Even if it’s flat over the next few years, it’s why you have more then one position, and if it does go up, you still have it.

I don’t compare MDB to oracle. It is an entirely new solution to a problem if anything is complimentary. A solution to the unstructured portion of the volumes of big data that is growing every day. I have only seen forecasts to 2020, suggesting nosql will be a 4 billion market. If MDB can capture 1/4 of that it’s p/s goes way down. I have seen estimates that anywhere from 30% to 90% of data is unstructured data. It suggests to me the market MDB is in is very large. Large enough so that it could be much bigger than its current $4.5 billion market cap today.

This is why I don’t know how to value MDB. I don’t see it as stealing orcl market share but something to address what they are not. And I don’t know how big that market is, or how much MDB or even nosql will get if it.

They were obviously doing the right thing by giving it away free and monetizing it later. The goal was (and still should be) to get as many people on it as possible as soon as possible. This obviously lowered their rule of 40 score.
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