A P/E of 207 could also be expressed as 1/207 = 0.48% rate of return on your investment. That's easier to compare to inflation, and to your bank account. :P Of

A P/E of 207 could also be expressed as 1/207 = 0.48% rate of return on your investment. That's easier to compare to inflation, and to your bank account. :P Of course, your bank account doesn't have much opportunity to grow its business, and Twitter doesn't have FDIC insurance. More generally, the value of a company is the sum of all its anticipated profits for all time... discounted for inflation, risk, and the time value of money. (The first two of those discounts are obvious; the "time value of money" is just the fact that it's better to have $50 now than an inflation-adjusted $50 in 30 years because you could do something with the money now, like invest in other companies or invest in bonds or invest in re-insulating your basement to save on heating.)