You have learned about several different approaches for stock and company valuation including the Price-Earnings (or Price-EBITDA) Multiple Approach, which is a relative approach for stock valuation. After employing other approaches, you are now ready to apply the P-E multiple approach to valuing a publicly-held company in the EV sector with good growth potential that your company is considering to acquire. Your target company has been in business for several years since its IPO, but has not recorded a profit yet. As a newly-hired assistant to CFO, you are in charge of valuing your target company.
Discuss (a) what problems you might encounter in applying the P-E (or P-EBITDA) Multiple Approach to your target company; and (b) what alternative RELATIVE approach(es) you could use in place of the P-E (or P-EBITDA) Multiple Approach to value your target company.