Stock market - profitability
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.
Yup. Me joining Google recently and getting half a million stock grant at the dip.
Decline in growth. Not a decline in revenue.
Decline in both, companies missed the numbers and gave poor guidance
This level of growth is unsustainable
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.
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.
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.
@rdfrt totally agree. Especially as rev and profits still increasing. I guess that'd also cause eng compensation to be in check
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.
Of course, that’s why it’s called a correction