Ask HN: Are there no irrational/incorrect valuations? [Re: WhatsApp and others]
And those posts are invariably met with responses that mostly agree with the valuation, and make several rational-seeming arguments why the valuation makes sense.
It seems there is no valuation for which one cannot come up with rational arguments supporting that valuation as the correct one (at least correct for the company making the acquisition).
So, I have a question for people who defend these valuations: Are there no incorrect/irrational valuations?
Off the top of my head, some reasons for valuations that can turn out to be wrong are:
1) The due-diligence on the acquired company was not thorough enough, or missed an important point
2) Expectations/predictions of where the market will be in a few years are wrong
3) Collusion between investors/stakeholders at the acquired and acquiring company, which increases the value of the acquisition so that investors in the acquired company get handsomely rewarded [how often does this happen?]
I would assume there are several more possible reasons for a bad valuation, but what I read on HN and related news sources are back-and-forths between people who are flabbergasted by the high price and people who claim that it is a perfectly good price.
Are there more nuanced positions between the above two? If yes, what are they, and why don't we see them more often on HN?