The new generation has called for an era of weakness for tech stocks


What is price increase? This question has resurfaced through the stock market this week, as has inflation stalked Stocks of Wall Street and high-growth technology have hit.

The headlines that spread the news of a technology crash have, of course, been encountered by a variety of companies in the sector. For Big Tech, this week’s losses just count as a blip. But next-generation investors in growth firms face new uncertainties.

Consider the controversial big data firm Palanter, published last September. Tuesday, this is the latest Financial results Perfectly measured in terms of free cash flow, a pickup in growth and a jump in profitability were revealed.

Cloud software stocks are often applied based on the “rule of 40” measurement – the rule of thumb that should combine revenue growth rate and profit margin together, should be in the top 40 – Palanti is now the highest rated, followed only video meeting application Zoom And data warehousing companies Snowflakes.

The truth is, this trusted software business model still needs more time to prove the kind of love that investors have transformed. Even by the standards of the technology world, the use of its stock options looks disappointing – including the recent transfer to the chief executive. Alex Carp A stock and pay package worth about $ 1.1bn.

However, this week’s results have shown progress. Wall Street response? To cut 8 percent of the company’s shares when trading began on Tuesday, a route was extended that dropped more than 60 percent from the top since the beginning of this year.

Palatia was not alone. The correction in the shares with the highest rated growth is underway long before the start of this week. Shares of Zoom and Snowflake are now about 50 percent below their record highs. Cloud software stocks, which saw some of the biggest gains, have recently lagged across the board, with the Bessemer emerging cloud index falling 22 percent from its high point in March.

This is partly a much-needed correction after the dynamic driven assembly on software shares. But it also reflects a unique financial rationale that would leave shares of Growth among the biggest casualties if the financial situation changes. Higher interest rates offset the cost of earning more in the future – something that hurts indiscriminately the companies whose most profitable years are still far away.

There is still plenty of room for further compression. Snowflake, for example, still trades 50 times its expected revenue this year, although the outward growth of Zoom during the epidemic has reduced its own revenue by more than 22 years.

Tesla, one of the symbols of the current stock market boom, is one of those that has a reading room. Its shares fell nearly one-third from the January peak. But Tesla is still more valuable than the next four most expensive car companies in the world – although global vehicle sales last year were only 0.8 percent.

Meanwhile, hitting the most valuable growth stocks does not lead to an inevitable end to the broader technology-led stock market rally. The combined market value of Apple, Microsoft, Amazon, Alphabet and Facebook fell by about 50 450 billion in the first three days of this week as a handful of giant technology companies led the market higher since the beginning of 2019 as countries like the US and UK began to emerge from the epidemic. However, the retreat represents less than 6 percent of their total value.

The surprise rise in growth and profits in the first quarter of this year proved that, after expectations from digital dependence on the depth of the epidemic, Big Tech is now in a good position to return. The strong secular growth trends that have subdued them – shifting to digital advertising, the rise of ecommerce and rebuilding IT through cloud computing – still have time to run.

This suggests that more ops could be produced as a result of upward stock markets than at the end of the next phase of digital growth. Larger platforms promise reliable, double-digit earnings growth at a time when investors are forced to be more selective.

Nothing went badly for Palantier this week. Wall Street took a second look at the company’s results after the knee-jerk reaction on Tuesday morning, and Zoom and Snowflake also trailed its shares back close to 18 percent. In a world where growth is in short supply, such companies should still order premiums – even as new times of uncertainty sink.

richard.waters@ft.com .com



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