Yahoo! Inc. (NASDAQ:YHOO)

The Price to Sales (P/S) ratio between 2006 and 2017 exhibits significant volatility, characterized by a deep contraction followed by a substantial recovery. The fluctuations in the P/S ratio are primarily driven by movements in the share price, as sales per share remained relatively stable throughout the analyzed period.

Initial Valuation Contraction (2006–2009)

A sharp downward trend in the P/S ratio is observed from 2006 to 2009, falling from 8.48 to a period low of 2.56. This decline occurred despite a concurrent increase in sales per share, which rose from 3.71 to 5.17. The compression of the multiple is directly attributable to the decline in share price, which dropped from 31.45 to 13.23 during this interval.

Stabilization Phase (2009–2012)

The P/S ratio entered a phase of relative stability between 2009 and 2012, maintaining a narrow range between 3.32 and 3.61. During this period, both the share price and sales per share showed limited variance, suggesting a period of market equilibrium regarding the company's revenue valuation.

Rapid Valuation Expansion (2013–2015)

A strong upward trajectory is evident starting in 2013, with the P/S ratio climbing from 4.85 to a peak of 8.98 in 2015. This expansion was driven by a significant increase in share price, which surged from 21.94 to 44.28. In contrast, sales per share grew only modestly from 4.53 to 4.93, indicating that the valuation increase was driven by market sentiment or future expectations rather than organic revenue growth per share.

Recent Volatility (2016–2017)

The final period is marked by a correction in 2016, where the P/S ratio dipped to 6.06, followed by a recovery to 8.56 in 2017. This rebound correlates with the share price reaching its maximum value of 46.24, returning the valuation multiple to levels seen during the 2006 and 2015 peaks.