In class today I talked about an interaction with my old boss 20 years ago. Our startup was acquired. The P/E rose to 400. I asked my boss “the market average P/E is 16, we are at 400, isn’t this overvalued? Shouldn’t I sell?” At the time he told me “your MBA does not apply anymore, it’s a new economy.” The stock went up in the next month or so from 180 to 250.
Within a year it came crashing back down from $250 to $3. I then asked my boss “does my MBA apply now?” He told me his wife was already upset with him.
So here we are today, 20 years later. TSLA has a P/E over 900. Does my MBA apply?