What is the meaning of Overvaluation?

Overvaluation is a stock whose price seems unjustifiably high based on standard measures, such as its earnings history, is considered overvalued. One indication of overvaluation is a price-to-earnings ratio (P/E) significantly higher than average for the market as a whole and for the industry to which the corporation belongs. The consequence of overvaluation is usually a drop in the stock's price-sometimes a rather dramatic one. However, in the current market, the high stock prices commanded by some Internet-based companies seem to defy conventional valuation standards.