https://finance.yahoo.com/quote/PLTR/
Alex Karp has something figured out. The investor class loves him.
https://finance.yahoo.com/quote/PLTR/
Alex Karp has something figured out. The investor class loves him.
Also P/E doesn't matter for companies that have not been profitable for long. Any PE number above 100x is very likely just noise. I wouldn't look at anything too far above 30x, maybe 40x to account for the craze behind NVDA today
To take that even further, imagine ACME Corp.'s stock price is $1.00 today. You're a research analyst and built a very robust model based on your understanding of the company, the market in which it operates, corporate guidance, competitor performance, your experience, phone checks with the sales channel, etc. Your model currently says the company will have negative ($0.01) EPS over the next 12 months. Based on this information, its implied forward P/E multiple is -100.0x.
The next day, you come to work and update your model based on some new information like the Fed cutting rates by 25 bps or revised labor market assumptions, what have you, such that your expected next twelve months EPS is now positive $0.01. The implied trading multiple is now 100.0x.
Do you think a $0.02 change in the expected EPS should result in a 200.0x P/E difference? No, it shouldn't. The P/E ratio for a company with negative or near-zero earnings has no meaning.
Only true in a ZIRP world, which no longer exists. Companies have bills to pay, and if you're constantly bouncing around 0 PE gambler's ruin is not far ahead
The least objectionable defense of my argument is that many such companies are choosing to reinvest so much of their cash flows into more growth because that creates higher NPV than the alternative. If they wanted to, they could be profitable, but they choose not to be in order to be MORE profitable in the future.
Also note EPS is an accounting metric, so it's just "theoretical" stuff. It's not cash flow. These companies in general have positive operating cash flow... including PLTR