Hi Victor, may i check with you which metric (or a combination of metrics) is suitable for Sass companies?
Is there is difference metric to use between:
- Negative net profit + positive OCF
- Negative net profit + negative OCF
1.If the company have positive cash flow then you can value using POCF
2.For those lost making and operating cash flow negative, as what Jieren had mentioned, you can use Price to Sales. Comparing with peers is one way to gauge the benchmark but in the end it all about understand the company total addressable market (TAM). If the company have a long runway for TAM, even at high valuation, you can still get multi-bagger but of course you are taking a risky bet here too. So you have to size your position properly.
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