Re: Andreesen sells 25%; Amazon capped out; 40% illiteracy...

Mike Masnick (
Sat, 21 Mar 1998 10:59:22 -0500

At 03:44 AM 3/17/98 -0800, I Find Karma wrote:
>Like Yahoo, which has a price-to-earnings ratio of 170 (!). That's
>insane -- in 1997, Yahoo posted $2.5million profit on $67million in
>sales. So why in the world is their market cap at $3.82billion (based
>on stock price $92.38/share last week)? Irrational exuberance.

While I agree that 3.82 might be a bit high for market cap on Yahoo! (right
now), I'd ignore P/Es on any internet stock if I were you. P/Es are
looking at past numbers, and for Internet companies that doesn't make much
sense. Obviously, the market cap is based on what investors feel is the
future potential for companies like Yahoo! That makes P/E a useless
number. I do think that Yahoo! has huge potential in the coming years, but
there are a lot of question marks between now and then, and so I'd
hesitate, too, on giving it a market cap around $4 bil. but for future
reasons, not past ones.