Speaking of probabilities;
For a startup, you value it's potential against it's odds of success. While professionals diversify with dozens of companies, like I hope most of us have (not me, yikes!). They rely on the 1 out of x that returns 100x to pay for the losers. We all know that. Anyways...
I'm just surmising, but if I were to put $1k in today I'd think:
I'd probably get filled at a basis of 6-8 cents, let's say 8 (=12,500 shares).
70% chance I sell for 5 cents or less or never, so $0 = 70% *$.00 = $0
25% chance I catch another uptick if something small happens and interest gains, spikes to 30 cents, average sell at 20 cents.
= 25% * $.20 = $375
5% chance this actually happens, we're not talking $10 shares, that's crazy, but $1 is in the range of possibilities.= 05% * $1 = $675
A theory in valuation would add those sums up after they are factored by probability and say the value is $1,500, with a massive level of variance.
Given that those probabilities are total conjuncture, and the one variable that matters most is what that %5 chance (which is also a variable) can deliver (maybe far greater), meaning the 'expected value' that I posited at $1,500 is meaningless, I admit, like most things in finance it means a hill of beans.
