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So, since NFLX is at 2x it's historical norm, how bad is that? And what is a good P/S ratio? Is that entirely dependent on the company and sector it's in? Or are we merely looking at the P/S for a specific company an noting its value in relation to historical and/or projected values?

Hey Paul:

Using P/S as a single data input is probably meaningless. Remember, high P/S in the setting of very high growth rates in revenue is more likely the norm.

So a P/S <1 is ideal when dealing with a slow growing company but would be completely unrealistic for a company growing revenue at 50% YoY.

My point really was that if one has a stock with a P/S of 20 growing revenue at 50% YoY, should they stumble even slightly.....this happens:

So there is a great deal of pressure on these high P/S stocks to keep showing very high growth.....and for some reason, we have seen several guide lower growth rates for 2019. But make no mistake, some high P/S stocks can stay high for quite some there is no timing value to the ratio.....just risk value.
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