The problem with P/E is that, while it’s great to measure business health internally, a company that has great earnings and then decides to “invest in growth” instead of paying dividends, is just a Ponzi scheme as far as investors are concerned: no expectation of returns from the company, only from the hype among other investors.
Some companies give dividends, some don’t. It’s a difference in strategy, and I think more of a young company vs old company thing. I don’t find it particularly meaningful. If you are growing quickly, it makes more sense to use your financing to finance more growth. If you’re not, makes more sense to attract investors with a healthy dividend.
A company that can’t offer a ROI to its stockholders, is a startup that should never be allowed to go public; stick to angel and venture investors instead. Public stocks relying on the hype of “growing quickly”, are a Ponzi scheme through and through.
If we speak of company ages, the argument doesn’t hold either:
AAPL - 49yr - 0.48%
MSFT - 50yr - 0.88%
NVDA - 32yr - 0.04%
AMZN - 31yr - 0.00%
GOOG - 27yr - 0.49%
TSLA - 22yr - 0.00%
SpaceX - 23yr - not traded
A good chunk of the US market is made up of Ponzi scheme companies. With 401k-s tied to market investments, people are setting themselves up for a very rough awakening.
And it’s still way overvalued. Market cap greater than Toyota? Good one
It can drop another 90% from here easily. Toyota’s in better shape as a company these days.
Is TSLA overvalued? To be generous, let’s compare them to just NASDAQ stocks:
Um, try with P/E. Stock price is meaningless.
Meaningful part are the dividend ratios.
The problem with P/E is that, while it’s great to measure business health internally, a company that has great earnings and then decides to “invest in growth” instead of paying dividends, is just a Ponzi scheme as far as investors are concerned: no expectation of returns from the company, only from the hype among other investors.
Some companies give dividends, some don’t. It’s a difference in strategy, and I think more of a young company vs old company thing. I don’t find it particularly meaningful. If you are growing quickly, it makes more sense to use your financing to finance more growth. If you’re not, makes more sense to attract investors with a healthy dividend.
A company that can’t offer a ROI to its stockholders, is a startup that should never be allowed to go public; stick to angel and venture investors instead. Public stocks relying on the hype of “growing quickly”, are a Ponzi scheme through and through.
If we speak of company ages, the argument doesn’t hold either:
A good chunk of the US market is made up of Ponzi scheme companies. With 401k-s tied to market investments, people are setting themselves up for a very rough awakening.