Time for a healthy pullback, page-23

I did not think that analysis tells the whole story.

First those astronomical PE #s don't reflect NEA's long term prospects. If you believe the NEA story thenthe company will keep expanding both its market reach and sales at an exponential rate until it reaches its natural limits.  The questions we have to ask is how long will that take and then at the end of the tunnel what will be its earning capacity.  In the meanwhile net earnings are academic provided they are within a sustainable range because management can increase or decrease invent in expansion out of cash flow and say stay at close to breakeven until the company is mature. Therefore the future PEs are meaningless unless calculated after the company stops this rapid expansion.

Second the reason NEA, and other growth stocks are currently being hammered is because investors have significantly increased predicted future interest rates because of inflation fears in the US brought about because of the inflationary impacts Trump's corporate tax cuts and tariff wars.  With a growth stock like NEA even if you do not change your long term earning predictions, the value of that predicted earnings stream is impacted by the discount rate used to work out a current value of those future earnings. I believe those higher predicted interest rates and now being used to reduce the NPV of shares like say Amazon.  My instinct is that  the flow through effect to shares like NEA is currently overdone but time will tell.