At the end of 2020, America’s largest gas supplier, EQT, which supplies about 4+% of the total energy demand in the USA, was valued at $4 billion.
At the same time, Facebook had a valuation of $1 Trillion.
EQT has risen, and is now valued at $8 billion, and yet Microsoft is paying $70 billion for a gaming company.
Does America have its priorities mixed-up? Or is it just “economics?”
The problem with a traditional industry like natural gas is that the margins are low. We are seeing that now as NG hits a certain level all of a sudden coal is competitive again.
Own an exclusive video game franchise and the profit margins are enormous. Candy Crush may have taken a few hundred thousand to build, but a few years later the company could be sold for $6 billion.
It’s the same reason diamonds are expensive and water is cheap even if we need the latter to live and never need the former.
Good perspective
Energy isn’t that great an industry. Subject to so much chaos and regulations. Gaming just keeps making money. Doesn’t even get messed up by lockdowns.
Victor Davis Hanson raises this question all the time. He is a champion of people who MAKE the real things we use every day. He questions the intrinsic value of anything that Silicon Valley produces. We can all live without the Internet, smart phones, and flat panel TVs.
It would be a lot harder to live without food, without houses, without roads, without health are, without cars and gasoline.
Yet the values of both companies and people both are out of whack. Blue collar people who make things are undervalued. Companies like EQT who deliver the gas we use to heat our homes and cook are undervalues. All high-tech firms are grossly overvalued.