I have a theoretical question for you all experts.
There seems to be this continuous trend especially in silicon valley, where startups prioritize growth above all else. Money keeps flowing in so long as they are growing fast, even when there is no sustainable business model. If you agree with me that this is true, please read on.
Now assuming I have some insights about a company that just went IPO earlier of which the exec team mentality is exactly what I talked about above. All they had done was spending investors' money on give-aways to attract large number of customer sign up. The plan was to IPO to make their shares worth a lot of money, and then leave the mess to investors. They used clever accounting tricks to present themselves as having a big upside, but is not fooling me. Their IPO was a bit of a success, share price is a healthy number.
At this point, what action can I take to make money using my insight of such company? I thought of tools like short selling and put options but those have a time limit. That is, longer I wait, the more I bleed. For the sake of the discussion, let's assume the company will keep posing significant losses every year for the next 10 years. What would you do if you were me?
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