TMT (Tech, Media & Telecom)
What typically happens to a tech company's valuation when it 'graduates' from revenue multiples to earnings multiples, and why is that transition dangerous?
Model answer
As growth decelerates into the teens, the market stops paying for the dream and starts paying for delivered profit: the anchor shifts from EV/Revenue to EV/EBITDA, then FCF and P/E. The danger is the…
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