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P/E is meaningless because it doesn't normalize to the number of shares. What you want is the price to sales ratio, which normalizes for market cap. And yeah, t
by titzer 5y ago
P/E is meaningless because it doesn't normalize to the number of shares. What you want is the price to sales ratio, which normalizes for market cap. And yeah, tech stocks are ridiculously overinflated compared to every other sector of the economy. Facebook ranks #3 in P/S ratio even in the tech industry.
So yeah, it's an absurd market valuation based on speculation of growth.
- s1artibartfast 5y agoHow is P/E not normalized? IT is literally the ratio of a company's share (stock) price to the company's earnings per share
- mrfox321 5y agoP/E does normalize by market cap. Earnings is actually earnings per share.
- deleted 5y ago[deleted]