Why Do Different Stocks Have Different Price-to-sales Multiples?

In an environment of rising inflation and interest rates, most new-age stocks are struggling. In recent times, backed by expectations of a bright future, these stocks were being priced aggressively, especially when seen on traditional valuation metrics. Most of these companies are loss-making even at the operating level. Not surprisingly, price-to-sales (P/S) is the most commonly used valuation metric to evaluate them. 

The P/S multiple shrinkage has…

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