I'm not that familiar with tech company revenue growth examples but can you point to many other $5B companies (or companies already making $100M revenue) that get 50% YoY growth for 10 years? As far as revenue goes? That kind of revenue growth would put them into the top 500 companies in the US by revenue, close to eBay [0]. To me this seems very optimistic but I only known the basics about Zapier, not their future direction etc so I'm likely missing info.

[0] https://en.wikipedia.org/wiki/List_of_largest_companies_in_t...

Virtually all of the companies trading north of 30x sales are ridiculously overpriced. It’s just a bubble, don’t allow it to distort what long term values really are.

Amazon and Cisco were similarly overvalued in 2000. It took Amazon 7 years to trade back to that price. Cisco never has.

I'm going to assume, based on your outlook and name, you're a traditional value investor. I consider myself one too, and have read Margin of Safety, Buffet, and Intelligent Investor.

Companies north of 30x sales are generally overpriced, but that metric alone is still woefully inadequate to determine true NPV of future earnings. Software co's can afford higher P/S for their true value because of the unprecedentedly high margins they're able to achieve and reap as profit once operating expenses are managed. There's a reason BRK bought Snowflake. Amazon was still a great purchase in 2000 because what ultimately matters is the long term value. You can bet that you'll get more value by buying at a cheaper price later on, but that may ultimately never happen. Knowing that AMZN would be where it's at in 2021, buying it in 2000 is the right choice without 20/20 hindsight of market conditions. Same is true of high value companies like Cloudflare and Fastly. There may be interest rate increases or other reasons they become further discounted in the next 5 years. However there's more a chance that they're true value is adequately discovered while one stays on the sidelines. The margin of safety for them is great and of course we'll be free to see after a few plus years.

I also wouldn't bet on interest rates rising (or falling). Market consensus for their current price is usually pretty good and there are many reasons why interest rates are historically low and likely to remain roughly so.

Amazon stock price dropped over 90% in 18 months after March, 2000. There is no excuse for not doing basic valuation estimates, it can save you from these collapses. You can still love Amazon’s business on 2000, but not overpay for it, just as you can do same with Tesla today.

And the Fed is at zero percent. Name another period where zero percent rates ever existed, and how long did it last? When the money supply has grown 50%+ over the last year how are we avoiding inflation, and if inflation kicks up how are we avoiding higher interest rates?

Those are P/Es, not P/S.

If Zapier nets 25% after taxes, it’s valuation is 150x earnings.

And Shopify, Square and Tesla’s valuations are even more absurd.

Mentioning these 200-1000 P/E companies, as others do, is such an oddity, because there are 500 other companies with 0 earnings or negative P/E that are worse in that aspect.

To invest successfully you don’t pay a high price saying “well there are worse companies at worse prices out there”.

Valuations are always determined by the NPV of future earnings, discounted for time and cost of money. Given rising interest rates all of these valuations will get slashed substantially.

It’s a bubble, after the internet bubble it took Amazon 7 years to trade back to its bubble price. Cisco never has.