Stock market - profitability

Google TYAPU
Nov 24, 2018 16 Comments

Anyone find it a good thing to have this stock market correction.

Apple, Microsoft, Google, Facebook, Salesforce, Amazon are all incredibly profitable. And they aren't going anywhere.

This crash will really hurt the unprofitable tech companies. Some of which will never turn a profit.

This means well move more towards normal business fundimentals and have less nutso companies that are detached from reality.

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TOP 16 Comments
  • Google Groogle
    Yup. Me joining Google recently and getting half a million stock grant at the dip.
    Nov 24, 2018 0
  • This comment was deleted by original commenter.

    • Google TYAPU
      OP
      Decline in growth. Not a decline in revenue.
      Nov 24, 2018
    • SAP kbron
      Decline in both, companies missed the numbers and gave poor guidance
      Nov 24, 2018
    • Google TYAPU
      OP
      @kbron source of decline of profitability?

      Not talking about as a percentage of rev but raw profit brought in.
      Nov 24, 2018
    • SAP kbron
      Look for the last earnings reports for all major companies included FAANGs.
      Nov 24, 2018
    • Google TYAPU
      OP
      Appl. https://www.stock-analysis-on.net/NASDAQ/Company/Apple-Inc/Ratios/Profitability

      Consistent Quarterly increase of net sales, gross margin.

      Yes profit as percentage of rev / share price is down. But apple is still increasing the amount of money they make each quarter.

      Seems like wstreet just got a bit too ahead of itself. However apple is a healthy, growing business nonetheless
      Nov 24, 2018
    • Amazon / Eng Cowboy4
      Does this mean I’m going to have to hold for another decade or however long until after recession blows over and economy booms again
      Nov 24, 2018
  • LinkedIn / Eng
    goldbug

    LinkedIn Eng

    PRE
    Google
    BIO
    Full time coder and part time gold dealer.
    goldbugmore
    P/E are still very high. AApl is about P/E 15 and Goog is about 40. JPM is also about 15 P/E.

    Chinese banks are trading at 5 P/E and high growth Chinese stocks are about 10 P/E. Not recommending anyone to buy Chinese stocks here, but that is how a depressed market feel like.
    Nov 24, 2018 4
    • Facebook Rdfrt
      p/e of ~10 would be the mark when I would consider any FANG a buy. At this point downside risk is much higher than the upside. This means at least a 30%-50% haircut for all of them.
      Nov 24, 2018
    • Google TYAPU
      OP
      @rdfrt totally agree. Especially as rev and profits still increasing.

      I guess that'd also cause eng compensation to be in check
      Nov 24, 2018
    • Forecasted p/e is more important than trailing in
      Nov 24, 2018
    • Facebook Rdfrt
      In a steep bear market drop it doesn't matter much whether you are looking at forward or trailing since no one knows the future earnings with much confidence. You are basically betting on the caliber of the company and rough valuation after a let's say a 60% drop in stock price.
      Nov 24, 2018
  • Google xorraxrax
    Amazon's P/E ratio is around 100. Just to unroll that a bit, that's 100 fucking years for this company to earn the cost of a single stock unit with its current business and re-investment model. There may be a lot of prospect in this, and the plan of conquering the world may be very real. But there is also a lot of trust and expectations factored in this P/E, so as soon as those expectations are not met (and that's pretty much means as soon as the growth stops being exponential), the stock price will adjust to make the P/E value match better the reality. And it's not necessarily bad - there are many companies with P/E ratios of 5 or 3, like Ford or GM, but to expect P/E of significantly greater than 10, there should be a lot more happening than just good business.
    Nov 24, 2018 0
  • Reddit Snoopysnoo
    Of course, that’s why it’s called a correction
    Nov 24, 2018 0
  • Apple hMWF54
    This level of growth is unsustainable
    Nov 24, 2018 0
  • Facebook Rdfrt
    Stock market predicts recessions quite well (one could argue they are partially the cause). I believe that's what the market is signaling here. It's all about the future, not the past or current business conditions since those are already priced in. The actual hit to the economy, company revenues and earnings will show up in reports a year from now and it will be severe.
    Nov 24, 2018 0

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