FSM INVEST EXPO 2020
Asked 4d ago
For those who lived through the dotcom bust, do you see any similiarities with the current tech boom and overvalued tech stocks? Tech startups all coming up with insane valuations, tech stocks keep rising too
Yes, you are right that tech stocks are currently super overvalued - people are looking wayyy ahead of it and even though it's burning through cash quarter after quarter, the market is still pushing the price up because of their insane growth rate.
However for me, I think the difference is right now, information is readily available online and easily accessed. You can actually assess if a business is "all fluff" or if even at the high valuations, it is being justified through the management decisions, future plans, and their growth rate.
I am probably too young to recall how markets were like during the dotcom bubble but this time round, I feel that prices are rather justified and are adequately priced for the scale the respective technological companies are in the present day.
I guess previously it was more on product, but now things have shifted to data which is a resource that is rather hard to put a monetary value on as well.
Burning through investors' money to push up valuation
There is! Companies with funny name and unsustainable business model are given wonderful valuations, despite them making tremendous losses. Many start ups dont seem to have a monetisation plan, similar to those companies in the dotcom boom
Example is SEA group which is currently viewed as a billion dollar market cap when the company itself is making hundred of million in losses. Its e-commerce line, shopee is making one billion in losses annually and no research analyst is flagging this red flag