I don't get it. Can a financial genius here chime in? Is the business of making people obese with artificial sugar and shit immune to recession? Is tech generating less value to society then Coke? We got lyft and stripe layoff today but not Coca cola?
People drink more coke and eat Mc Donald’s in recession to save money. Companies spend less in recession. PE is not an indicator of value to the economy or to human life.
I won't comment on the value to society, but good business operations and financial discipline matter. There are a few things to learn from these legacy companies
Probably because most tech companies don’t produce any actual goods or services for people. They just mine data and sell ads…
Tech pays $$$$, KO don’t.
Cuz most ppl love the brown obsesity happiness water
PE quality differs industry wise.
It's a great buying opportunity 🙂
Don’t read too much into PE. While it’s an indicator, Coke is a dividend stock and the primary investors may already be ok with the cyclical nature of it. They are not immune to recession, they just didn’t need that much of a growth story to begin with for their investors. So not enough investors sold and so the price has held on. Tech has been oversold right now due to the nature of the investors who are really counting on growth and may flee at the slightest sight of a slowdown. This is a market inefficiency and there are forces at work to even it out. But it takes time for convergence across sectors
Coke is cheap and soda cost less than $.05/ concentrated gallon to make (used to work for soda company am in corporate finance). Very low COGS, high profit margin. Also, wrecking our kidneys with soda is deep into American culture like apple pie & shootings plus it’s cheap customers end and mostly drank by poor (the poor spend money rich don’t). Google’s customers are business that reassess risk when markets are down and pull back, the soda poor consumers only pull back when they loose their jobs. $5 coke is more likely to sell than $1m google ads. Soda companies makes money with volume plus high margins.
PE is based on expected earnings. Market assumes that googles revenue will go down year over year due to inflation and profitability will take a hit due to expenses. Of course if that doesn’t happen the stock price will go up to balance it out. On the other hand, market assumes that cocas revenue will not go down. So more people are willing to invest for the preservation of capital and dividend it gives.