Detached from assets

Unicorns

A friend sent the above image.

Is something interesting happening? No doubt. But, it is nothing but an extreme version of Asset light model. Therefore, the E in P/E should be very high. Therefore, P/E should be lower than the normal, conventional average. Hence, a high P/E for these companies is more anachronistic and wrong than in the case of other conventional stocks. That is one interpretation.

There is also another reason to think why P/E should be low in these cases. Do such models have low barriers to entry? If so, will high E be possible and even if it is, for how long?

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