For companies like Linked In with tiny earnings a sky high multiple might make sense. They only have one or two quarters of profitable business in. But for companies like Netflix and Amazon, who have sustained growth, revenue, earnings, and a pretty clear business model, you really have to think about the magnitude that 70x earnings growth implies.
I guess it depends on how you define sky high. LinkedIn is trading at 2100x earnings according to google finance. Now there are certainly times when P/E is meaningless and LinkedIn probably is one of them but for a company with no track record it should give some pause.
The question is are people investing in these companies or are they speculating about them?
