Hacker News Reader

The reason why forward guidance matters is because of valuations. Google PE is over 20 as of close of day. Entire S&P 500 PE is 15 and even that is traditionally high. If Google's PE reverts to the S&P500, you're talking a 20% cut just from here. Forward guidance and consistent growth is what mutual funds will pay a premium for. Lots of companies have a ton of room to drop if PE ratios drop.

View on HN

> Entire S&P 500 PE is 15

Google demonstrates steady 25% y/y grows for 20 years already, most of SP500 probably doesn't.

Which is why guidance matters... Most companies are just expected to grow barely faster than inflation, which isn't too hard. But companies with high PE are expected to grow much faster. It's not this quarters revenue that matters, but future ones. Guidance is about future quarters. Sour guidance means you're no longer a rocketing tech company.

FWIW, sp500 forward pe more like 18

Reply on news.ycombinator.com