The investment markets are made up of millions of buyers and sellers. To our way of thinking, asset prices are set by the buyers. Afterall all, the price of an asset is equal to the what someone will pay for it. Most of the time, we can find a reason why someone is willing to pay a such-and-such price for a stock, but many times we do not. Amazon is one such company. It sports a market cap of $470 billion, that is more than 3 times revenue but 250 times earnings. The cash flow picture does not look much better, as it trades at 38 times Enterprise Value to EBITDA.
Salesforce.com is another such situation. CRM is a good company offering a good product. The company sells enterprise cloud computing solutions that focus on customer relationship management. Big companies subscribe to the Sales Cloud for data storage, monitor leads and progress, and forecast opportunities. This helps them gain insights through relationship intelligence, and collaborate/coordinate sales efforts with information distribution on both desktop and mobile devices. Their products are also vital for partner relationship management.
