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Even after big price cuts, these tech stocks are no bargains

Bloomberg
Bloomberg1/16/2022 9:47 PM GMT+08  • 4 min read
Even after big price cuts, these tech stocks are no bargains
Higher interest rates suggest a healthy economy, but they also have a deflating influence on how future profits are valued.
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To see why a levelling of tech valuations has the capacity to terrify even staunch stock bulls, consider the hyper-speculative software makers at the centre of the recent equity storm.

Those firms have suffered what is by any measure a pummeling in the last few weeks following the hawkish shift by the Federal Reserve. The tech shares lost a third of their value when measured via indexes compiled by Goldman Sachs Group Inc.

And yet even with those losses behind them, the group -- a basket of companies for whom profitability has in many cases yet to materialize -- still trades at 16 times sales. That’s almost three times the multiple of the Nasdaq 100 Index.

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