Gavin Baker @GavinSBaker Husband, Becky Painter. CIO, Atreides Management. Former PM, Fidelity OTC fund. No investment advice, views all my own. Dec. 14, 2019 1 min read

1) Yes – great post by @bgurley

EV/GP generally better than EV/S. Helps normalize for wildly different margin profiles between various marketplace models (delivery, rideshare, travel, 3P ecomm), divergent gross margins within SaaS (50% to 90%) and 1P vs. 3P ecomm models.

2) But all stocks – and private co’s - will eventually be valued on the FCF yield to the equity and/or the EV.

All companies need to generate cash at some point. The kindness of strangers doesn’t last forever. 😃

EV/GP is just a temporary stop on the inevitable road to EV/FCF

3) Some good threads recently from @RamBhupatiraju and was fun to reread the  post. Get something new out of each post every time I reread one.

You can follow @GavinSBaker.


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