At the end of the article on April 3rd, a reader left a long comment:

“If we evaluate crypto projects based on the future cash flow value created by the ‘company/project’, DeFi was overly leveraged in expectations last round,” “Apart from some DeFi projects that can make money, chain game NFTs almost have no earning potential,” “Even if we give a valuation, it would probably have to be much higher than the valuations of Nasdaq tech stocks like Nvidia and Tesla.”

This comment touches on many very valuable issues. I will try to share my views on these questions one by one.

First of all, we must pay attention to, and I want to emphasize again:

The intrinsic value of a company is the discounted future cash flow of the company.

What does this future refer to?

It refers to the future survival period of this company.

Since it is the future survival period, then the judgment of how long this company can survive in the future is very knowledgeable. It is purely a matter of personal opinion. It cannot be analyzed quantitatively, but only qualitatively. This qualitative analysis particularly tests an investor's understanding of the company.

For a good company/project, those who do not understand it may think its future potential is limited, thus concluding that its value is very low, or due to market fluctuations, they may sell its stock/token early.

For a bad company/project, those who do not understand it may think its future potential is limitless, thus concluding that its value is very high, holding onto its stock/token tightly, even if its stock price/token price goes to zero, still fantasizing that it can make a comeback.

Therefore, Buffett and Duan Yongping emphasize so much on “moat,” “differentiation,” “corporate culture,” and “future cash flow,” all of these ultimately aim to judge how long this company can survive in the future and how much cash flow it can generate during that time.

If a company has a strong corporate culture, a strong moat, and essential differentiation, insightful investors can tolerate a relatively long future------I believe you won’t make money for the next four years; but by the fifth or sixth year, you will make money; by the tenth year, you might even earn what other companies would take 20 years to earn.

A typical case in the U.S. stock market is Amazon.

Amazon did not make money for a considerable time after going public; not only did it not make money, but it also continued to incur losses.

However, Bezos day after day, year after year, had to convince investors: Amazon must persist because it will soon become the leader in e-commerce and the industry monopolist. At that turning point, it will bring substantial returns.

Just talking is not enough; he also demonstrated to investors the progress Amazon made, even though the process was very difficult.

Amazon went public in 1997, and it wasn't until 2015, 19 years later, that it achieved its first quarterly profit, and it wasn't until 2016, 20 years later, that it officially bid farewell to 20 years of losses, becoming one of the seven giants in the U.S. stock market today.

The maintenance and rise of stock prices are absolutely not supported solely by beautiful stories and grand narratives; they must have real performance improvements and progress. Even if it’s not a leap forward, there must be real growth.

Bezos fulfilled his promise, and Amazon's investors finally saw the light after enduring the storm.

But this process took a full 20 years of construction and exploration. This is a test for entrepreneurs and a test for investors.

At the same time, more such companies end in failure and delisting.

So how investors choose in the face of this situation tests their understanding of the company.

Returning to the DeFi and chain game projects mentioned in the comment above.

I can tolerate its current overvaluation, and I can tolerate its thin profits today, but this tolerance requires seeing progress and results. Even if it continues to incur losses in the next few years, are you still adhering to your original intention, still building continuously, still exploring business models?

It cannot be said that the valuation is high, profits are nonexistent, and in this situation, there is still no effort to improve, no persistence in improving technology, no continued effort towards past goals, no development of a viable business model, and then still talk to me about the grand narrative of the project, saying that value analysis does not apply to crypto projects?

In addition, another equally concerning issue is: in order to please the “market” in the short term, to please speculators, recklessly driving up stock prices/token prices, sacrificing long-term interests, forgetting the original intention, and deviating from the direction.

As for the NFTs mentioned in the comment, it depends on the specific positioning of the project.

For example, for a project like CryptoPunks, its positioning is very clear: it is an on-chain collectible of the digital age, it does not need to develop or change, and I do not care whether it can generate cash flow.

But for Bored Apes, it positions itself as a collectible, and I believe the vast majority of investors will not buy into that, because most investors hope it is a growth-oriented project. Since it is a growth-oriented project, it must ultimately talk about cash flow and profitability.

The examples I provided above convey a simple point:

Short-term bubbles, inflated valuations, and even losses are understandable and tolerable; even for projects I consider good, I can tolerate a relatively long waiting period.

But this waiting must ultimately see progress and sincerity, and progress and sincerity ultimately boil down to generating a strong moat, a viable business model, and bringing substantial profits and cash flow---not discussing these is merely talking about speculation and gambling.

This is common sense.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。