Re:Microsoft to Acquire Activision Blizzard
by mathattack on Friday January 21, 2022 @10:35AM
(#30024944)
The larger you get, the harder it is to justify outsized PE multiples. Plenty of theory and empirical research supports this.
Even with their recent 11-12% correction their PE is ~33.5. [0] That’s higher than today’s S and P PE, and more than double the long term median (~15) and mean (~16) PE. [1]
This means that the market is betting on some combination of margin expansion and outsize revenue growth.
McKesson is in another industry with different margin and growth, and is valued differently.
Even with their recent 11-12% correction their PE is ~33.5. [0] That’s higher than today’s S and P PE, and more than double the long term median (~15) and mean (~16) PE. [1]
This means that the market is betting on some combination of margin expansion and outsize revenue growth.
McKesson is in another industry with different margin and growth, and is valued differently.
[0] https://finance.yahoo.com/quote/MSFT/
[1] https://www.multpl.com/s-p-500-pe-ratio