Investors seem to have taken heed of analyst ratings in response to the higher-than-predicted earnings Apple reported last week, the share price climbing from $524.75 before the company released its financials to approaching $600 at the time of writing.
Fortune suggests Apple’s results isn’t the only factor at play, with investors perhaps also following Greenlight Capital’s lead in moving out of other tech stock with particularly high price to earnings ratios – the measure of how a share price relates to its earnings. The higher the P/E ratio, the more over-valued it looks according to traditional measures …
Comparing AAPL’s P/E ratio of 14.24 to Amazon’s 462.68 may be slightly unfair, given that Amazon has very deliberately chosen growth over profit, but the comparison with Facebook at 72.62 does illustrate one reason why tech investors may be headed toward AAPL.
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