Since this article is meant to be accessible to a lot of different audiences, it is difficult for me to parse what statements are just liberties being taken for the sake of an easier explanation, or whether it is arguing what I think it is arguing.

In a fundamental sense, the value of a share of a company's equity is the current value of that share of future earnings (including future unknown lines of business, proceeds of liquidating assets, etc) until the end of time.

In order to divine the expected current value of future earnings is the marginal cost of a share of the company's equity. Just as the price of the last lot of GE shares sold determines the value of GE, the value of Snapchat is determined by the price of the most recently sold share.

That does not mean that any shareholders have an accurate assessment of the value, and knowing the recent price is ~$25 does not tell us how many people would be willing to buy it for $1 or how many people would sell it for $100. Knowing the answers to the latter questions would be a step toward answering how much current shareholders could get if they all wanted out, and how much it would cost to buy every last share.

Since eternity takes a long time, the market's marginal price of a share is a good proxy for the value of a company. It is the expected value according to investors with the most recent skin in the game. Anyway, that's a long way to get to what I find really puzzling:

>When you look at the rumored Snapchat valuations of over 3 billion dollars, it’s difficult to understand how an investor can think that Snapchat is worth that much. Because the truth is, it’s not. Those rumors, even if true, don’t actually value Snapchat at 3 billion dollars. To be precise, they are bidding on a price per share of a specific series of stock. As matter of common discourse, we multiply that number by the total number of shares outstanding and call that a valuation. But the difference still exists and it’s important.

I'm parsing the middle sentence with "value" as a transitive verb, and the subject as actually an implied "investor" rather than "rumor", in line with the sentences before and after. And, I find that the serious problem here is that that is at least the expected value according to that investor.

I read the rest of the explanation as a way to get at how the probability distribution around that expected value may play out, but that does not change the expected value.

However, to expand a little on the payouts: Suppose the disruption of Snapchat could be known to cost a competitor future revenue with a present value of exactly $3B, but the present value of all earnings of an independent Snapchat could be known to exactly equal $2B. If that competitor can buy and shutter Snapchat without any anti-trust hurdles, then in a fundamental sense the competitor would pay up to $3B for Snapchat (and the shareholders would fundamentally be willing to sell if paid more than $2B, with the market eventually awarding between $2B and $3B to the owners depending on what is negotiated).

In reality those numbers can not be predicted, but a valuation of $3B is a statement that the expected value is really worth $3B. An investor who pays $300M for 1%, but expects the future proceeds to be worth less than $3B is gambling that there is a sucker who has expectations that are too high, not respecting fundamentals. An investor could estimate that the earnings will be a certain amount in the hands of other management and still be in line with fundamentals, but claiming that the price will increase without producing some future cash flow or having a fundamental value to another buyer is a gamble that the market is stupid. (It's a safe bet that the market is stupid, but the trick is knowing how stupid, in what direction, and for how long.)

Again, maybe I am missing something, or misunderstanding what is being said, but on the surface it is really frightening to read columns like this that appear to claim that an entire market can have a mean of valuations that are not in line with fundamentals.