In the stock market, everyone often hears something called the P/E ratio. So what is the P/E ratio, and is it applicable to digital currencies?
Price Earnings Ratio (P/E or PER), also known as “price-earnings ratio”, “price-to-earnings ratio” or ” market-to-earnings ratio (referred to as price-earnings ratio )”. Price-to-earnings ratio refers to the ratio of stock price divided by earnings per share (earnings per share, EPS). Or divide the company’s market value by the annual profit attributable to shareholders.
When calculating, the stock price is usually based on the latest closing price, and for EPS, if it is calculated based on the published EPS of the previous year, it is called historical P/E; the EPS estimate used to calculate the estimated P/E is generally based on the market average Consensus estimates, that is, the average or median estimate obtained by the organization that tracks the company’s performance and collects the forecasts of multiple analysts. What is a reasonable price-to-earnings ratio does not have certain criteria.
The price-earnings ratio is one of the most commonly used indicators to assess whether the stock price level is reasonable. It is a very valuable stock market indicator. On the one hand, investors often don’t think that the profit figures calculated in strict accordance with accounting standards truly reflect the company’s continuing operations. Therefore, analysts often make adjustments to the company’s officially announced net profit.
So is there such a statement about the price-earnings ratio in encrypted digital currencies?
The answer is that most of them are not. In the domestic non-small market software, we can see that among the top 100 digital currencies, the real currency with a price-to-earnings ratio is almost zero. Because the currency circle is not a stock market, if you want to see the price-earnings ratio, you still have to recognize the platform currency or the company that has the ability to make money to issue the currency.
The platform currency is supported by the platform and supported by the platform’s own profits. Naturally, it will not be much worse. If you have your own business as a support, you have profits as a support. There is a lot of room for imagination of this kind of digital currency in the future.
Recently, the foreign project Bitwin issued a digital currency BMW. According to the white paper, BMW has two major profit models, including the income and profits obtained as a cryptocurrency asset value-added service, and the increase in market transaction value as a digital asset. Ultimately, the profits generated by these two profit models will be reflected in BMW’s trading market price. Judging from this, the price-earnings ratio of BMW coins will be relatively high in the future.
Secondly, the white paper introduces that as a cryptocurrency asset, BMW tokens follow the rule that the market price is equal to the total amount of funds flowing into the market than the total amount that can be traded in the market during the current time period. 50% of the revenue generated by BMW’s value-added business will be used to repurchase BMW tokens in the secondary market, and 50% will be used as a security fund to ensure the continuous and stable growth of the total amount of BMW market funds. At the same time, for the repurchased BMW tokens, the blockchain will be destroyed, which will permanently reduce the total amount of tradable tokens circulating in the market. BMW tokens are repurchased and destroyed from the secondary market from time to time. The number of tokens destroyed has reached 90%, and the BMW Foundation has begun to distribute profit to wallet users who hold BMW.
The destruction of 9000w of tokens is very small for the market outlook, and there is huge room for imagination in the future. Burning ten times the amount means that the price of a single currency will increase by at least ten times in the future. This point of appreciation is very large.