1) Yes – great post by @bgurley
EV/GP generally better than EV/S. Helps normalize for wildly different margin profiles between various marketplace models (delivery, rideshare, travel, 3P ecomm), divergent gross margins within SaaS (50% to 90%) and 1P vs. 3P ecomm models.
2) But all stocks – and private co’s - will eventually be valued on the FCF yield to the equity and/or the EV.
All companies need to generate cash at some point. The kindness of strangers doesn’t last forever. 😃
EV/GP is just a temporary stop on the inevitable road to EV/FCF
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