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Peter Lynch (Index)

Polaroid
NYSE:PRD
1973-1974
Industry: Camera
Category: Technological Edge

Context
Polaroid is a camera and film company with 32 years of prosperity.

The Story
Lynch made this famous example, where people said, if Polaroid had ever dropped below $100/sh,
back up the truck and buy it all.
People didn't pay attention to how overpriced Polaroid was, it was trading 50x earnings.
They said "if it's gone down this much already, it can't go much lower".
The stock fell from $143 in 1973 to $14 in 1974 (89% of it's price in 18 months).
People expected an incredible growth spurt from the new SX-70 camera.
But the product was only a moderate success, because the camera and film overpriced.
Polaroid would have to sell 4 cameras to every family in the US to justify a 50x PE.

Notably
The stock eventually went up to $60 in 1978, but stumbled back to $19 in 1981.