If Amazon's stock price fell by 25%, and Alibaba's did the same, as an Alibaba shareholder would you take comfort in the fact that Alibaba still has a PE ratio one tenth Amazon's? Of course not.
Actually, yes, I would take comfort in that fact. It would mean that Alibaba was far more likely to recover its value.
It would mean that Alibaba was far more likely to recover its value.
You seem to misunderstand what the PE ratio actually represents.
As an experiment, I'd suggest you test your hypothesis against actual market data. Hint: you will have no problem finding stocks with higher than industry average PE ratios pre-2008 crash that have significantly outperformed their lower PE ratio counterparts since the market bottom in 2009.
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If Amazon's stock price fell by 25%, and Alibaba's did the same, as an Alibaba shareholder would you take comfort in the fact that Alibaba still has a PE ratio one tenth Amazon's? Of course not.
Actually, yes, I would take comfort in that fact. It would mean that Alibaba was far more likely to recover its value.
You seem to misunderstand what the PE ratio actually represents.
As an experiment, I'd suggest you test your hypothesis against actual market data. Hint: you will have no problem finding stocks with higher than industry average PE ratios pre-2008 crash that have significantly outperformed their lower PE ratio counterparts since the market bottom in 2009.