The Jailhouse

[Tesla_se]

Stocks with incredibly high price/earnings ratios (or no P/E ratios) no one is really looking at earnings.

They are looking at the promise of future earnings. And the promise of future earnings comes from high revenue growth curves with a scalable business model that produces higher earnings in the future.

So any company with a proven high revenue growth curve and a scalable business model can be expected to have strong future earnings. Therefore, paying more on a price/earnings ratio basis is worth it.

That is how stocks get P/Es of 400. The current P/E ratio, however, is meaningless in this line of thinking.

It is far more important to gauge the stock's valuation by the price/sales ratio because all of the assumptions of future earnings are based on the revenue projection, not the earnings history.

The price/sales ratio is:
Market Capitalization /Trailing Twelve Month Sales

https://www.briefing.com/investor/learning-center/analysis/price-earnings-ratio-vs-price-sales-ratio/

note: Zoom out to the 2 year chart the ground is trembling.