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r.bartlett

Share Price V Company Value

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Gents

I have been invited by a trusted friend to invest in a company which if all goes well will ve expected to increase in value 100x over the next 5 years Thus if I invest 10k (he has invested 25k) what effect would that have on share value assuming it does what they suggest (I realise it could all crash and burn too so lets not go there...)

Any advice would be most welcome

Richard

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Gents

I have been invited by a trusted friend to invest in a company which if all goes well will ve expected to increase in value 100x over the next 5 years Thus if I invest 10k (he has invested 25k) what effect would that have on share value assuming it does what they suggest (I realise it could all crash and burn too so lets not go there...)

Any advice would be most welcome

Richard

Mhhh. Not exactly sure what your question is.

You value a company on the basis of its earnings or profit. small companies are usually based on a value of 5-10 times earnings. So of the company makes £100k profit then logically someone could pay £500k-£1m for it. I say could as realistically 2-3 times earnings is a logical valuation for a small company in the current economic climate.

Nonethless most start up's have no earnings so valuation is a mere guess. Likewise increasing by 100 times is again a pure guess as to the potential value increase 5years.

I wish you the best of luck but I would take any form of valuation with a pinch of salt.

Edited by ringledman

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This is the highest possible risk type of investment so only go for it if you are able to accept 100% loss on your investment (which is the more likely outcome for startups rather than the 1000% gains).

I'm not saying don't do it. Just make sure you can take the hit with a smile on your face.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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