The Return of the Negative P/E Ratio

Moneybox
A blog about business and economics.
Aug. 21 2012 8:55 AM

The Return of the Negative P/E Ratio

"Trulia’s net loss for the six months ended June 30 widened to $7.64 million from $2.61 million a year earlier," so naturally the company is planning a $75 million Initial Public Offering, a plan that reminds me of my senior year of high school and the good old days of the dot-com bubble. Which is weird because I never really bought the hype that a generous valuation for Facebook somehow added up to a new tech bubble and then Facebook shares started declining.

But in all seriousness, I really love Trulia. When I was looking to buy a condo a few years ago, I found Trulia indispensible as a way of not only finding specific listings but conveniently getting an overview of city-wide market conditions. Poking around on the site to look at different cities and different neighborhoods is still a favorite hobby of mine. I like their blog on real estate trends, and I like that they hired Jed Kolko. I even like that they're doing an IPO based on rapidly rising revenues and falling (and negative!) profits. It's optimistic! There's even something exciting about the idea of an IPO that does seem in part to be motivated by a desire to raise capital, rather than just a means to let people cash out of the business. So I like it. But the return of the high-tech negative P/E ratio IPO seems pretty noteworthy even though this is a relatively small company in the scheme of things.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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