[tyrfing]

Most of these tech companies build business models around giving away money, with a plan of eventually making a profit. They are affected by interest rates because the higher interest rates you have today, the more attractive it is to have money today instead of tomorrow. Interest rates available today are the discount rate for those future cash flows (profit).

[gsibble]

This. Historically, a company is fundamentally valued by the discounted rate of its free cash flows into the future. The discount rate is decided by several factors including the risk free rate.....which is frequently tied to interest rates. So interest rates go up, the risk free rate goes up, cash flows become worth less, and corporate valuations go down.

[worik]

Discounting is a fool's game, IMO.

We only have data for the present and the past. Prediction is hard, especially for the future.

I prefer using nominal quantities, known values, and ignore people's predictions. Not that they are always wrong, or never right. But because I like to make decisions based on facts.

[bogomipz]

>" Historically, a company is fundamentally valued by the discounted rate of its free cash flows into the future."

Could you elaborate on this, is this a metric that VCs use in their valuations? How is the discount amount determined?