It was the most anticipated IPO
since Facebook. And, at first glance, Twitter appears to be suffering
the same result as Facebook. According to one expert, it's about to get
worse.
Eric Jackson, founder of Ironfire Capital, says Twitter's relative
valuation is right now too high, even using a metric that was a favorite
in the dot-com bubble at the turn of the millennium – the
price-to-sales ratio.
Investors and analysts use compare the price of shares to the revenue
per share when there's not enough earnings history for a company or
when forecasts are difficult to determine. While this measure is less
volatile than the more popular price-to-earnings ratio, its biggest
drawback is that it doesn't give a sense of a company's costs relative
to others.
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