Meh. Many well-established companies in a lick of trouble run negative P/E ratios for years...as in, the firm is losing money. There may be arguments for or against a given share price, but anything coming strictly from very high P/E values basically shifts the discussion to "what's the forward P/E?"

And of course small companies (and startups) lose money all the time, and that's expected while they're gaining momentum.

Firms that have very high P/Es (OpenTable and LinkedIn also come to mind) somehow have convinced investors that it's rational for them to spend every scrap of money on growth on a relatively massive scale, as so that the "P" part of the equation approaches zero. It seems then the discussion shifts to what the 'forward' P/E is, aka a prediction about the future where growth has stalled and the business is established and printing money without an obvious place to allocate it sensibly...like Google, or Apple. The theory then being it'd go to dividends, but that doesn't seem to be what has happened, because the business tries to justify holding onto the capital just in case it's needed to grow even more.

FWIW...I don't know anything about this stuff and plow just about everything into Vanguard. I have no interest in beating the market, I just want to track "the economy" so I can meet my needs when I can't work anymore. So, grains of salt and all that, but when I think about what a hyperbolic plot does it always mystifies me why people care so much about P/E when either term is close to zero.

What I mean is that because Salesforce: 1/ hits their sales target 2/ grows reasonably fast 3/ is the leader in SaaS for many large investors (like vanguard) Salesforce has very high valuation, which allow them to acquire Company, raise money in very good conditions and keep growing. In Salesforce case, most of their products are very bad by Silicon Valley/standard standard, and yet, the Company is worth a lot of money.

As much as Salesforce is criticizing Oracle, Salesforce is behaving just like Oracle - with a cooler CEO (who is himself a former Oracle guy).

The reason is because high P/E stocks are speculations, not investments.