Has the myth of high-growth U.S. tech stocks busted?

The high-value technology stocks that once rode the Fed’s east wind looked like the “perpetual motion machine” of the stock market. However, from the current point of view, the high growth of technology stocks is like a “perpetual motion machine”, just a myth rather than a reality.

Netflix (Netflix) stunned the market with its first-quarter report, with its global net paying subscribers falling for the first time in more than a decade, compared with an expected increase of 2.5 million. As soon as the news came out, Netflix plummeted by more than 25% directly after the market on Tuesday, and continued the decline overnight.

Netflix’s slump directly dragged down peer streaming media and technology stocks. Disney and Warner Bros. Discovery both fell about 5% overnight, and the “Metaverse” Meta fell more than 7%.

Although Tesla, regarded as the “ultimate growth stock”, announced a better-than-expected profit in its earnings report on Wednesday, investors saw a little turnaround and the stock price rose 5%, but Tesla also emphasized that supply chain problems will still be in 2022. continued.

According to Bloomberg, Dan Suzuki, deputy chief investment officer at consultancy Richard Bernstein Advisors, said:

Behind the high valuations is a strong belief that these companies will continue to achieve unparalleled growth and that all are likely to be winners…(But) we are already starting to see more and more evidence that questions these assumptions.

At present, Netflix’s “Waterloo” has aroused concerns from the outside world, and investors are worried that companies like Shopify will have difficulty delivering satisfactory results in the earnings season. These companies have all benefited from the increase in demand during the epidemic, but now they can only watch the dividends disappear.

Craig Erlam, senior market analyst at Oanda, said Netflix is ​​prompting investors to reassess many assumptions about tech stocks.

Erlam said:

With household budgets squeezed, where would streaming services such as Netflix rank if they were to cut spending? … what other technical services are also easily disposed of?

While it’s okay to spend a few extra dollars a month, Americans will have to make some concessions when they face the highest currency in 40 years.

According to Neil Saunders, managing director of data firm GlobalData:

That’s a very early sign…with the effects of inflation, people will definitely want to cut back on those monthly recurring spending, which obviously includes streaming.

But that view hasn’t dampened Wall Street’s confidence.

While the tech-focused Nasdaq 100 has fallen 14% since the start of the year, with large-cap stocks including Microsoft and Google parent Alphabet underperforming, Wall Street is increasingly concerned about the profitability of tech stocks. optimism.

Many investors were also undeterred and continued to view companies like Apple as targets for reliable growth, so Apple shares held their ground amid Wednesday’s storm and have outperformed the S&P 500 this year.

This article is reprinted from: https://news.futunn.com/post/14716482?src=3&report_type=market&report_id=203604&futusource=news_headline_list
This site is for inclusion only, and the copyright belongs to the original author.