As you might know, OSIM as of writing has fallen 15% today! as its 3rd quarters results was disastrous, with earnings falling 28%!!
A few years back, growth stocks like OSIM and Super Group started trading at 20 times earnings or so. The big question is, why do investors value them at such high earnings multiples?
Well the primary reason is that these investors expected their earnings to grow rapidly, say 10-20% higher earnings year after year. They also saw the explosive rise in OSIM’s and Super’s stock prices, clouded by greed they were so confident in paying 20 times earnings as they hoped for the markets to value their shares at even higher multiples!
With such lofty valuations any disappointment would only trigger a sharp sell down. As seen in Super Group’s disappointing earnings this year, the stock fell over 40%…From a high of $2.20 level to …