OT today's society, Whatnot vs Sotheby's

[balltrash]

Not speaking to WhatNot's value and/or if they actually make any money but, and this is hard to fathom, Sotheby's LOST $106 million in 2023 and upped that to $248 million for 2024. Will be interesting to see how much they can loose on $6 billion in sales this year...

Originally Posted by Aquarian Sports Cards

Whatnot recently did a round, raising capital at a valuation of $11.5 Billion on a projected $6 billion in sales in 2025.

Sotheby's sold in 2019 for $3.7 Billion on $6 billion in sales.

it's just like the emperor's new clothes to me though. Are they profitable? If yes, than why are they bothering to sell more of the company to raise money? If no, then why are they "worth" so much?

We've become a world of speculators and the boom bust cycle is just speeding up all the time and hopping around from dotcom to real estate, to collectibles to AI and round and round we go.

Nobody wants to build something of actual value they just want to get in on something of perceived potential value and make their killing flipping their piece.

If you wanted to make actual profit Sotheby's is a much better buy than Whatnot. If you want to see if you can find the next bigger sucker, Whatnot all the way.

I compare the all of these boom markets to Florida Condos in their boom/bust cycle. Eventually you have to find someone who wants to live there. You can shuffle the property from investor to investor marking it up every time, but unless you find someone who wants to live there at your price, you're just hoping for one more sucker bigger than you.

I'll go back to shaking my fist at clouds now...

[sbfinley]

Originally Posted by balltrash

Not speaking to WhatNot's value and/or if they actually make any money but, and this is hard to fathom, Sotheby's LOST $106 million in 2023 and upped that to $248 million for 2024. Will be interesting to see how much they can loose on $6 billion in sales this year...

I'm not an economist so pardon what might be obvious, but how does a company that has zero cost of goods lose a quarter billion in a year?

[Aquarian Sports Cards]

Originally Posted by sbfinley

I'm not an economist so pardon what might be obvious, but how does a company that has zero cost of goods lose a quarter billion in a year?

Same way my company on a little over a million in sales a few years ago was still losing money.

A company that has cost of goods also usually has MUCH higher gross margins.

[Rhotchkiss]

Scott, regarding this statement: "We have become a nation where perceived potential has become more important than any actual value."

I think that has been the case for a long time, likely because its human nature. Consider the NFL team who trades away a productive, veteran player for a 3rd year draft pick in next year's draft. Or the pharma company listed on Nasdaq at $80/share and has earning of -$1.30/share, but that pill in that trial sure looks promising. Or, farmers who went west looking for land, as if there wasn't enough in the existing 13 states/colonies. Then, there is my uncle who (I think in the late 1990's) paid a small fortune for the first plasma TV when the traditional TV on his mantle worked just fine and showed all the same channels, at a fraction of the price. Humans are always seeking whats next -- potential is sexy, its unlimited, its the future. The current is just plain boring.

Now, as far as companies go: I think many people start and build companies for the sake of creating actual value, earning a great living, and having a gratifying career/work-life situation. I did exactly that. But, those stories don't make headlines; although they sure as hell can attract private equity if there is enough meat still on the bone for the next guy to double his money.

I also think we need to distinguish the owner/operator from the investor. While they both are "at risk" (money, time, social capital, etc.), the latter has no true tie to the company, sees it only as a means to a profit-end, and they are not "long" in the company/business. Different strokes for two very different types of folks. The build, sell, rinse and repeat model is alive and well (and nothing new), but so too is the build for long-term value model alive and healthy, it just doesn't get the headlines.

Like may Grandfather used to say: "All you can do is live and be well, and leave the rest to God". Grow your business Scott, have fun, earn a good living, and one day (I hope) sell it for a ton.