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Just looking at p/e and p/s ratios is not enough. Amazon also had a p/e over 100 and a p/s over 10 in its earlier history. You also have to look at the market
by ArtTimeInvestor 1y ago
Just looking at p/e and p/s ratios is not enough.
Amazon also had a p/e over 100 and a p/s over 10 in its earlier history.
You also have to look at the market size these companies are addressing while having few competitors.
Tesla for example is addressing "driving cars" with its self-driving project. There are 2B cars on the road. If we value driving them at $5 per day, that is $5 * 365 * 2B = $3650B in annual value. Capturing 10% of that would be $365B per year. At a p/e of 30 that is over $10T - ten times Tesla's current market cap.
- TheAlchemist 1y agoI think your numbers are a bit understated. You are missing some other important sectors Tesla is adressing - "driving cars on Mars" and "autonomous drones". You should add an additional 0 or maybe two 0s to your numbers.
- ArtTimeInvestor 1y agoThat's what you would have said when in 1999 someone would have told you that Amazon is addressing "ordering things". Now Amazon has a market share of 40% when it comes to ordering things.