Ok - you have my attention- I am a numbers guy!
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Posted On: 08/11/2017 4:04:46 PM
Ok - you have my attention- I am a numbers guy!
It was me who made the p/e comments with regards to startups. Although I cannot state that this is the case here, the theory is valid.
When investing in startups, there are scenarios where you calculate the PE multiple based on the 2nd or 3rd year of expected profits rather that the first quarter of the first year.
The theory applies specific to the model and expectation that the business will not be using just one plane 3 years out, but rather 10+ planes. To some degree, you need to extrapolate that across the period in order to fully define your expected value as the company matures.
Naturally - this is all forecasting and based on future results and expectations. How long until PE saturation? That is a sliding scale based on who is evaluating and what the expected expansion plans are disclosed as..... but the logical theory holds when valuing startups. The greatest potential increase in year over year earnings on a percentage and dollar basis is in the first few years. The theory as describe incorporates that facet.
So that is my case- as presented
It was me who made the p/e comments with regards to startups. Although I cannot state that this is the case here, the theory is valid.
When investing in startups, there are scenarios where you calculate the PE multiple based on the 2nd or 3rd year of expected profits rather that the first quarter of the first year.
The theory applies specific to the model and expectation that the business will not be using just one plane 3 years out, but rather 10+ planes. To some degree, you need to extrapolate that across the period in order to fully define your expected value as the company matures.
Naturally - this is all forecasting and based on future results and expectations. How long until PE saturation? That is a sliding scale based on who is evaluating and what the expected expansion plans are disclosed as..... but the logical theory holds when valuing startups. The greatest potential increase in year over year earnings on a percentage and dollar basis is in the first few years. The theory as describe incorporates that facet.
So that is my case- as presented
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