CLST Holdings Inc (CLHI)

[Renegades17]

Valuation- based off of FUTURE expectations




I've raised this point before, but valuations for high-growth companies in hot sectors are driven off of future expectations. Those expectations are based primarily on the attractiveness of the end market and the company's assets (intellectual property, human capital etc.). This is particularly true in the early-stages of the company's development. If venture capital valuations were driven off of trailing financial statement metrics, valuations for private companies would be a fraction of what they typically are and there would be no "unicorn" companies.

Management has a huge role in setting future expectations by telling a good story to potential investors. This is what the investor pack that the company alluded to yesterday will help do.