5 ms·

Price to earnings ratio is at an all time high, once the credit bubble bursts, so will the investors appetite for such companies.

by f430 6y ago

whitepaint 6y ago
You have absolutely no clue what will happen or when.
- f430 6y ago
  tell me. please why a company that loses 40 cents for every dollar they spend should have double digit multiples. you have 1 hour to reply with a fully cited explanation justifying this level of exuberance in a low yield credit bubble driving up valuations while overall the industry has seen a net reduction in profitability.
  - lrx 6y ago
    Literally saying no one knows.
  - GCA10 6y ago
    Fast-growing young companies with big ambitions often overspend heavily on everything (marketing, r&d, operations) relative to their current size. Their bet is that as they grow, they will gain unique dominance in their field, plus deeper engagement from customers, which will translate into much higher revenue/user and the emergence of a very profitable business. This is a workable strategy! Examples include Amazon, Facebook, Workday, Snowflake and practically every biotech company. Some wait until they're profitable to go public; some don't. It's also a strategy that often fails. Lots of less famous examples are out there, too. It's interesting that Coursera's 2020 revenue per current learner is about $8. I ran the numbers on Stanford ($6 billion budget; 17,000 enrolled students) and the revenue per learner is north of $300,000. Now Stanford sells a vastly different product than Coursera does. (At least right now.) And the bulk of Stanford's revenue comes via grants, investment income and other stuff including ticket sales. Tuition revenue per learner is far less, though still well into the tens of thousands of dollars per year. If you believe that over the next decade, the education dollar will be reallocated to the advantage of organizations like Coursera, the way to get rewarded for your prescience is to get in now and smile as you wait for the revenue/learner curve to bend your way. I'm not minimizing the risks. But if your analysis ends with "they're losing money right now," you're shrinking your horizons to a strange degree.
    - skinnymuch 6y ago
      Snowflake would be a poster child for OPs argument. Not against it. We don’t know what will happen with tech stocks like these over the next couple of years though as others have said.
      - f430 6y ago
        Right here comes the ad hominem attacks. Year 2000 called, P/E ratio is at dangerous levels. Not to mention frauds, crypto and somehow rolling a truck down a hill creates billion dollar companies over night meanwhile there is a liquidity crisis brewing in the bond market
        skinnymuch 6y ago
        Did you reply to the wrong comment? Your comment has nothing to do with mine. If not. You are possibly seeing everything as if you’re the victim or being attacked. My comment did not do any of that. At all.
    - f430 6y ago
      yet bond yields go up a small basis point and nasdaq wipes out gains from this year. The current loss leadership model works because of cheap capital. That's it. There's nothing genius about it. SaaS stocks are heavily inflated and were hit particularly hard with the recent correction. Double points if they bought bitcoins. > tell me. please why a company that loses 40 cents for every dollar they spend should have double digit multiples. you have 1 hour to reply with a fully cited explanation justifying this level of exuberance in a low yield credit bubble driving up valuations while overall the industry has seen a net reduction in profitability. so I dissed a YC company going public and it gets flagged. The censorship here is ridiculous and this place has turned into a creepy brogrammer pump & dump.

Price to earnings ratio is at an all time high, once the credit bubble bursts, so will the investors appetite for such companies.

by f430 6y ago

Price to earnings ratio is at an all time high, once the credit bubble bursts, so will the investors appetite for such companies.

whitepaint 6y ago

You have absolutely no clue what will happen or when.

f430 6y ago
tell me. please why a company that loses 40 cents for every dollar they spend should have double digit multiples. you have 1 hour to reply with a fully cited explanation justifying this level of exuberance in a low yield credit bubble driving up valuations while overall the industry has seen a net reduction in profitability.
- lrx 6y ago
  Literally saying no one knows.
- GCA10 6y ago
  Fast-growing young companies with big ambitions often overspend heavily on everything (marketing, r&d, operations) relative to their current size. Their bet is that as they grow, they will gain unique dominance in their field, plus deeper engagement from customers, which will translate into much higher revenue/user and the emergence of a very profitable business. This is a workable strategy! Examples include Amazon, Facebook, Workday, Snowflake and practically every biotech company. Some wait until they're profitable to go public; some don't. It's also a strategy that often fails. Lots of less famous examples are out there, too. It's interesting that Coursera's 2020 revenue per current learner is about $8. I ran the numbers on Stanford ($6 billion budget; 17,000 enrolled students) and the revenue per learner is north of $300,000. Now Stanford sells a vastly different product than Coursera does. (At least right now.) And the bulk of Stanford's revenue comes via grants, investment income and other stuff including ticket sales. Tuition revenue per learner is far less, though still well into the tens of thousands of dollars per year. If you believe that over the next decade, the education dollar will be reallocated to the advantage of organizations like Coursera, the way to get rewarded for your prescience is to get in now and smile as you wait for the revenue/learner curve to bend your way. I'm not minimizing the risks. But if your analysis ends with "they're losing money right now," you're shrinking your horizons to a strange degree.
  - skinnymuch 6y ago
    Snowflake would be a poster child for OPs argument. Not against it. We don’t know what will happen with tech stocks like these over the next couple of years though as others have said.
    - f430 6y ago
      Right here comes the ad hominem attacks. Year 2000 called, P/E ratio is at dangerous levels. Not to mention frauds, crypto and somehow rolling a truck down a hill creates billion dollar companies over night meanwhile there is a liquidity crisis brewing in the bond market
      - skinnymuch 6y ago
        Did you reply to the wrong comment? Your comment has nothing to do with mine. If not. You are possibly seeing everything as if you’re the victim or being attacked. My comment did not do any of that. At all.
  - f430 6y ago
    yet bond yields go up a small basis point and nasdaq wipes out gains from this year. The current loss leadership model works because of cheap capital. That's it. There's nothing genius about it. SaaS stocks are heavily inflated and were hit particularly hard with the recent correction. Double points if they bought bitcoins. > tell me. please why a company that loses 40 cents for every dollar they spend should have double digit multiples. you have 1 hour to reply with a fully cited explanation justifying this level of exuberance in a low yield credit bubble driving up valuations while overall the industry has seen a net reduction in profitability. so I dissed a YC company going public and it gets flagged. The censorship here is ridiculous and this place has turned into a creepy brogrammer pump & dump.