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[–] 6 points 4 months ago (7 children)

What is the normal ratio of annual revenue to valuation?

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  • [–] 15 points 4 months ago*

    10x is considered normal for big corpos.
    For growing companies and startups with (perceived) bright future it can go up to 40x, but only for a short time during initial growth stage.

    Edit: SpaceX P/E ratio at the IPO is 94. Which is insane.

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  • [–] 4 points 4 months ago* (2 children)

    Something bellow 4. Something bellow 7 in industries that need a lot of capital to make a little revenue.

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  • [–] 1 point 4 months ago

    It's not a useful metric because some companies have high margins (perfume, advertising, software) and some have low margins (grocery stores, space launches), and mandatory huge capital/cash reinvestment (AI, space launches). The reason to use a multiple to revenue is because of unprofitability. But all stock price is a function of profit and expected profit growth rate.... usually.

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