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YCharts recently caught up with @brianferoldi & @Brian_Stoffel_ to discuss "Everything Wrong With The P/E Ratio" & we learned some great insights on alternative valuation metrics that we’re excited to share. Let's take a look at $NFLX as an example:
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The PE ratio isn't always appropriate for every company during its growth cycle. Let's look at $NFLX, a known disruptor company with humble beginnings. The company experienced hyper-growth, before finally maturing into the household name we all recognize today.
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Because the PE ratio doesn’t factor in future growth potential, it’s not the best ratio to use in the early days of companies like $NFLX. For example, the chart below shows #Netflix’s PE ratio in orange during infancy, a whopping 1459.79. Why?
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