Progressive Stocks

[1husky1]

That is why the range 5-8 times. The higher number is used typically in fast growth companies.

"Suppose they were to become "just" cashflow positive next quarter but made ony $100 should the marketcap, depite rapid growth in sales, be only $500?!"

Yes understand your question and yes some future growth is always factored in from a shareholder valuation. From a company sell standpoint proforma numbers are used routinely as long as they can be backed up. ie just picked up 10000 stores of distribution that should result in 1 million cases annually at a this margin, X amount bottom line etc. Even though not realized yet it would be factored in to the sell price.

Sell price and shareholder valuation do not always match up in the early stages of growth. Shareholders are betting on future execution and realization. The two come closer together as the growth is realized and plan executed against.