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Subject:  Re: How long do P/S last? Date:  12/7/2018  1:49 PM
Author:  DreamerDad Number:  106365 of 115174

I am not arguing whether a stock can or should have a 20 or 25 P/S.

My question is what is the upside from there?

If that company is growing 50% per year, then the stock price can appreciate 50% per year and maintain the same P/S (ignoring increases in shares, I guess).

Not that 50% gain is bad. Just saying that the 200% type gain that puts a stock into the 20-25 P/S range probably won't get repeated in a following 12-month period anytime too soon.

Otherwise the P/S becomes what point do we say that is Juniper-in-late-90s absurd? some point the stock, ala Arista, sees their growth rate tick down. Suddenly all stock price appreciation ceases, so that the stock's P/S comes down.

So you have to bet on these factors:
The stock will grow at 50%, or more, for next 3-4 years or more.

And in that scenario you should plan on getting out in year 2 or 3, because once the growth stops, the stock growth plummets.

So I am arguing that it is irrational to think MDB can double in stock price in next 12 months, if their growth rate stays consistent at 50%, because their current P/S is already factoring that kind of growth in for next couple years.

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