Because of the beating #tech #stocks took in 2022 I made it my new years resolution to learn more about the black magic of #techstock valuation. Was reading "Nothing but Net" at the time and learned a lot...here's a summary:

NASDAQ (tech barometer) traded @ forward P/E of 20 from 2000-2020, S&P500 traded at 15X during this time period, S&P500 traded at 15X during this time. Key is to adjust #tech #stocks for their growth - Is stock trading at premium or discount relative to its growth rate? High growth rates can turn expensive stocks into reasonably priced ones.

Author cites PLCN and FB during their heyday to make the point that #stocks that trade at discount to premium growth rates can be attractive - i.e., P/E multiples that are below their EPS growth rates

Two specific cases, that as an #investor you may want to look at to capture potential multi-baggers, author deals with a) Co's with minimal earnings + sky high P/E multiples, and b) Co's with no earnings...let's look at each...

Co's with minimal earnings + sky high P/E multiples

History has shown that some of the greatest #investments match this classification at the beginning of their run...e.g., Amazon and Netflix

3 Q's to find potential #techstock winners:

Let's apply to $AMZN

Between '16 & '20 $AMZN had very high P/E multiple - median of 72. Author contends was reasonable:

What about co's w/ NO earnings?

More of art but ways to assess: Look at comparable public co's & then apply multiple (P/S)

4 factors to help find best comps:

a. similar sized rev base b. similar growth outlooks, c. gross margin d. long term operating margin potential

Q's to help: