discuss Upcomming 5l prediction

[Flipsbay]

Hello guys,

8 Months ago i was some what predicting 5l is the next big thing at that time some said its idiotic to think like that, some said impossible, some said only pronounceable are worth something. Now 2016 answers all those questions. We are looking even a bigger market than the so loved 4L.com domains

Anyway enough with the intro, what i wanted to know from you guys is what you think the future of 5l.com, both chips and pronounceable ones.

I think :

*** Random 5l chips will have 20$ each value
*** Types like ABAAC, ABACA will be at 70$ each
*** Types like AAABC will have 120$-150$
*** High End like AAAAB,ABAAA will worth 2000$

Yes above statements are purely what i think and has nothing to do with absolute truth, and i am also collecting sales data for some what accurate pricing but for now i think that has to wait another 3 months

Lets see what you guys think

Thanks.

 

[Recons.Com]

You are right if you are talking about real world assets with real company cash flow.

But if you are talk about assets like domains.... 4L.com may easy go to 4-5K levels within 2-3 weeks ))

This principle is universally applied. Cash flow is not a must know. It is enough that it is expected and you valuate future cash flows or that it is comparable to another asset that is shown to be profitable and then you use comps.

In the above calculations, I used comps from established asset class of 4L that is most relevant to 5L.

And the comp can be tested from 4L to 3L to check if it holds more or less true:

($2000+200)*20 - $200 = $43,800 floor which is more or less in the ballpark (4L.com floor is probably more like $2,200, then 3L.com floor calculated would be around $$47,800. So there is even some premium of 10-20% for shorter category, which makes it even worse for 5L category).

 

[Recons.Com]

Recons, thank you for your detailed analysis. I couldn't find a hole, but ...it can't be valid IMO
I mean, if the LLLLL.com value is at $110, the $8 renewal is a small % only..
Hmmmm checking checking

If and when 5L.com is $110, it means the buyer has already factored in $8 renewals and he really values the name at $110+200=310$ compared to a zero renewal fee .com (if it existed). That would also mean that he is valuing 4L.com at (110$+$200)*20 - $200 = $6000.

 

[TMarkus]

That would also mean that he is valuing 4L.com at (110$+$200)*20 - $200 = $6000.

Hm. I think After 5L.com buyout many and many 4L.com owners may deside together within short time period that their 4L.com should be around 4K-6K levels. Just because 5L.com buyout happend. and price for 4L.com rapidly go to higher levels. It may be started by some big players and there will be wave of growing and fixation at new levels.

All this may be done within 2-3 weeks.

 

[Recons.Com]

Hm. I think After 5L.com buyout many and many 4L.com owners may deside together within short time period that their 4L.com should be around 4K-6K levels. Just because 5L.com buyout happend. and price for 4L.com rapidly go to higher levels. It may be started by some big players and there will be wave of growing and fixation at new levels.

All this may be done within 2-3 weeks.

Sure. And that is a valid view and possible outcome. As long as you base your bet on that and don't place all your eggs in that basket.

Generally, it is wise not to allocate more than 20% of your total investment into very risky instruments, and even for that 20% spread it across few categories/types of assets.

 

[Asfas1000]

If and when 5L.com is $110,

I meant right now, as 1/20th of llll.com

 

[Recons.Com]

I meant right now, as 1/20th of llll.com

But that is definitely wrong approach!

If someone holds QWRT.com and another one holds QWRT+L x 20 chips, would you say it is the same? The owner of the former has to pay $8/year, the owner of the latter has to pay $160/year.

 

[TMarkus]

the owner of the latter has to pay $160/year.

thats why big players must promote market of 5L.com for levels $200-$250 per domain in long time distance.
and this will be done ))

 

[Recons.Com]

thats why big players must promote market of 5L.com for levels $200-$250 per domain in long time distance.
and this will be done ))

Well, if they do, I will get a free ride along with my 4L.coms )) I won't be holding my breath for now, though ))

And when you say "long distance", please do remember that this cannot be done slowly over time. It has to go up quickly before the renewals are due and if by the time renewals are due the floor is not established and firm, the whole "sand dam" will just wash off...

 

[TMarkus]

Yes. it is quite risky ivestment. and it is not depends on small investors with portfolios 1-10K domains.
The big players with portfolios 100K-500K domains together will create the market.

if they can do it - we all earn money. if not - we all loose )))

 

[Asfas1000]

But that is definitely wrong approach!

If someone holds QWRT.com and another one holds QWRT+L x 20 chips, would you say it is the same? The owner of the former has to pay $8/year, the owner of the latter has to pay $160/year.

Of course, but still a small % compared to the $2000 value.

I just don't get how an asset can be -$90 net value, when it costs $8...at worst you bought something useless and you're out $8.

 

[Recons.Com]

Of course, but still a small % compared to the $2000 value.

I just don't get how an asset can be -$90 net value, when it costs $8...at worst you bought something useless and you're out $8.

If you bought something that can have equity of $110 and liability of $200, then the asset is worth $-90

 

[krx]

i am building a function that is just to solve the issue you mentioned, submit a list and that function will tell you how many AABBC,ABACD etc pattern are there and what is the base price for them and what this lot can worth based on sales data

That would be a very handy feature.

 

[mitok]

Imagine one has $200 to invest. He is offered an investment option of 4% for year as long as he wishes. So, he'll be getting $8/year guaranteed. $200x4%=8$. Reverse of that calculation is $8/4% = $200, which means if you are offered a lifetime of revenue or expense of $8/year, that is equivalent of $200 or its (lifetime) Present Value. Why 4%? The higher the certainty of revenue/expense, the lower % rate associated with it. High certainty -> low rate. Since you are guaranteed to pay at least that, the rate for analysis has to be low.

Now, if someone pays $2000 for 4L.com chip he already factored in (even if he does not realize it) the PV of all renewals. Would he pay $2000 for 4L, if the renewal was $1000/year? Of course, no. And if he knew there is no renewals for 4L.com? He'd pay $2,200.

Now, we use widely accepted in the domain world concept that all the names of the following string should have similar value as one name of the previous string.

As there are 20 chip letters, QWRT.com would have the same value as all 20 QWRT+L.com names. But people forget here doing the adjustment for renewals.

So I use this method with the adjustment. $2,200/20=$110. That would be value of 5L if there were no renewal fees. But we already calculated that PV of .com renewals is $200. So we deduct $200 from $110 and arrive and negative value of $90.

Hope it helps )

I agree with your calculation, but not in any case. This works only for pure commodity domains accepted only as commodity, without any psychology factor included. Well, that is almost impossible.
So many Chinese investors invested in 5L.com chips (registrations and purchases). So psychology factor is already included here and tells that people believe 5L.chips are worth at least $8 at the moment, not -$90. There are also many example from the past when the price went up after the buyout so this is what many expect in this case too.
There are also many potential end users (many 5L.com chips are developed sites) so this is a bonus to fundamental value. There will be other bonuses soon, such as disability to register any 5L.com chip.
If people believe 4L.com chips will go up this is also a bonus for 5L.com chips price and will be included in the market price immediately. Expectations are always included in the price even before expected scenario occurs.

I traded a lot with stocks and I am aware that fundamental value is just ONE PART of current market value.

 

[urlurl]

That calculation is only good for random letter combo's
There is a large range of values for 5L's, and those with value before sold will always sell for good money.

 

[krx]

Imagine one has $200 to invest. He is offered an investment option of 4% for year as long as he wishes. So, he'll be getting $8/year guaranteed. $200x4%=8$. Reverse of that calculation is $8/4% = $200, which means if you are offered a lifetime of revenue or expense of $8/year, that is equivalent of $200 or its (lifetime) Present Value. Why 4%? The higher the certainty of revenue/expense, the lower % rate associated with it. High certainty -> low rate. Since you are guaranteed to pay at least that, the rate for analysis has to be low.

Now, if someone pays $2000 for 4L.com chip he already factored in (even if he does not realize it) the PV of all renewals. Would he pay $2000 for 4L, if the renewal was $1000/year? Of course, no. And if he knew there is no renewals for 4L.com? He'd pay $2,200.

Now, we use widely accepted in the domain world concept that all the names of the following string should have similar value as one name of the previous string.

As there are 20 chip letters, QWRT.com would have the same value as all 20 QWRT+L.com names. But people forget here doing the adjustment for renewals.

So I use this method with the adjustment. $2,200/20=$110. That would be value of 5L if there were no renewal fees. But we already calculated that PV of .com renewals is $200. So we deduct $200 from $110 and arrive and negative value of $90.

Hope it helps )

Correct me if I am wrong here, but is the basic idea that the current real value of any given domain reflects the cost of 25 years of renewals? That seems to be the way you arrive at a value of negative $90. Is that correct? Just want to be sure I understand it.

Wondering how that idea stands up against the more traditional one that the value of a domain (like a house, or a painting, or whatever) is what the market will pay for it.

 

[Recons.Com]

Correct me if I am wrong here, but is the basic idea that the current real value of any given domain reflects the cost of 25 years of renewals? That seems to be the way you arrive at a value of negative $90. Is that correct? Just want to be sure I understand it.

Wondering how that idea stands up against the more traditional one that the value of a domain (like a house, or a painting, or whatever) is what the market will pay for it.

No, it is not about 25 years, it is a perpetuity. If you deposit 100$ for perpetuity at 4%, you'll be getting $4/year forever, so $100 now is equivalent of $4/year if 4% return is considered risk free rate. The same way, if you deposit 200$ for perpetuity, you'll be getting 8$ a year forever, so $200 now (present value) is the same as $8/year payments.

Accordingly, formula of getting Present Value for regular cash flow is dividing annual amount by rate of return, in this case $8/4%=200$.

This is how, for example, rental property is evaluated, not based on the lot+construction, but how much annual net income it generates.

 

[DTR Alex]

so how will you calculate value of 5L compared to 4L?

 

[Recons.Com]

so how will you calculate value of 5L compared to 4L?

See please quotes from the previous posts.

LLLL.com chip price $2,000
Number of CHIP letters - 20
Renewal annual cost per name $8, lifetime present value (PV) $200

LLLLL.com price calculated:

(2,000 LLLL.com chip price + $200 PV renewals)/20 - $200 PV renewals = $ -90.

So the fundamentals analysis indicates that the substantiated value of 5L.com is currently negative $90.

Imagine one has $200 to invest. He is offered an investment option of 4% for year as long as he wishes. So, he'll be getting $8/year guaranteed. $200x4%=8$. Reverse of that calculation is $8/4% = $200, which means if you are offered a lifetime of revenue or expense of $8/year, that is equivalent of $200 or its (lifetime) Present Value. Why 4%? The higher the certainty of revenue/expense, the lower % rate associated with it. High certainty -> low rate. Since you are guaranteed to pay at least that, the rate for analysis has to be low.

Now, if someone pays $2000 for 4L.com chip he already factored in (even if he does not realize it) the PV of all renewals. Would he pay $2000 for 4L, if the renewal was $1000/year? Of course, no. And if he knew there is no renewals for 4L.com? He'd pay $2,200.

Now, we use widely accepted in the domain world concept that all the names of the following string should have similar value as one name of the previous string.

As there are 20 chip letters, QWRT.com would have the same value as all 20 QWRT+L.com names. But people forget here doing the adjustment for renewals.

So I use this method with the adjustment. $2,200/20=$110. That would be value of 5L if there were no renewal fees. But we already calculated that PV of .com renewals is $200. So we deduct $200 from $110 and arrive and negative value of $90.

Hope it helps )

 

[BrandChimp]

I don't know but I won't hold a lot of 5L..
I will stick with ultra premium like AABBB and put my money elsewhere like 4L 5N 6N .com

 

[frank-germany]

Imagine one has $200 to invest. He is offered an investment option of 4% for year as long as he wishes. So, he'll be getting $8/year guaranteed. $200x4%=8$. Reverse of that calculation is $8/4% = $200, which means if you are offered a lifetime of revenue or expense of $8/year, that is equivalent of $200 or its (lifetime) Present Value. Why 4%? The higher the certainty of revenue/expense, the lower % rate associated with it. High certainty -> low rate. Since you are guaranteed to pay at least that, the rate for analysis has to be low.

Now, if someone pays $2000 for 4L.com chip he already factored in (even if he does not realize it) the PV of all renewals. Would he pay $2000 for 4L, if the renewal was $1000/year? Of course, no. And if he knew there is no renewals for 4L.com? He'd pay $2,200.

Now, we use widely accepted in the domain world concept that all the names of the following string should have similar value as one name of the previous string.

As there are 20 chip letters, QWRT.com would have the same value as all 20 QWRT+L.com names. But people forget here doing the adjustment for renewals.

So I use this method with the adjustment. $2,200/20=$110. That would be value of 5L if there were no renewal fees. But we already calculated that PV of .com renewals is $200. So we deduct $200 from $110 and arrive and negative value of $90.

Hope it helps )

looks like I am really stupid
because I honestly think thats complete BS

 

[yogiDomain]

Of course, but still a small % compared to the $2000 value.

I just don't get how an asset can be -$90 net value, when it costs $8...at worst you bought something useless and you're out $8.

Nice observation

I dont get the point when people can buy domain at $8 why would they pay you double or 100$ for the same worthless 5L.

 

[BrandChimp]

Nice observation

I dont get the point when people can buy domain at $8 why would they pay you double or 100$ for the same worthless 5L.

Supply and demand.

If someone register every 5L .com left, people will want to buy from investor before prices rise..

Great patterns will be more valuable, of course, because there's less supply and they make you feel you own a >trophie>

 

[hollywood]

PV is based on regular cash flow, and in my experience the cash flow from domaining is not regular.

So to me the problem here is that present value analysis does not apply to domaining particularly well.

 

[DTR Alex]

Any extension that is already bough-tout, is selling at lower than the registration fee?

 

[Lionel Cohen]

PV is based on regular cash flow, and in my experience the cash flow from domaining is not regular.

So to me the problem here is that present value analysis does not apply to domaining particularly well.

I agree on that. The point of investing in domains is cashing out on an exit. The same way people invest in start ups that loose money for many years in order to grab/create their market and then being bought out at far superior multiple. Domains are not bonds, period.