Artis Real Estate Investment Pref Shs Series E T.AX.PR.E

Nvidia trading at 40 times sales

[Torontojay]

It amazes me that Nvidia can trade at such lofty valuations when you have companies that trade at 10 times or less free cash flow. Let's just distinguish that sales is much different than free cash flow. In other words, even if Nvidia had 100% profit margins, it would be trading at 40 times earnings!!! Absolutely insanity.

[DZtrader]

Earnings were up well in excess of 600 percent over last year. Many suggest they are still in early innings of their growth cycle. Perhaps that has something to do with it. Not unsimmilar to Amazon that traded at semi astronomical multiple in it's early days.

[Torontojay]

They said the same thing about Tesla. Earnings don't grow to the moon forever. A company trading at 70 to 80 times earnings can look very expensive if they have just one quarter of an earnings miss. Nvidia will have to execute flawlessly for a number of years and likely a decade to justify that multiple. There is a thing called competition too.  Btw, Nvidia is down  ~ 11% since

[DZtrader]

You're funny. Your mindset is that of an economist. It is a growth stock. Their growth is astronomical, they are priced that way because of their growth rate. When their growth rate slows their valuation will come back down to earth. You missed the move, like I have suggested about you before, big surprise. To make a silly comment of their stock being down over the last few trading sessions

[Torontojay]

Yes my mindset is that of an economist but my background is in finance and my specialist is in mathematics. I know very well how to put a value on a company using a number of techniques but thank you for reminding me. I almost forgot. It would be very difficult for Nvidia to maintain that pricing power indefinitely where they could justify such a ludicrous sales and earnings multiple. In fact

[DZtrader]

Yes, you state the obvious once again. No one suggested that they are trading very richly right now. Yes, perhaps one day their valuation will come in. On that day, you will exclaim, "see I told you so" , where did it get you, in the mean time traders/investors will have enjoyed gains in the 1-2000 percent range. To be fair, there will be those who can not recognize this drop off coming

[DZtrader]

Typo second sentence should say "aren't".