Morning Report: Growth tech stocks at home and abroad keep setting new records. What’s going on?
While you worked the last two days, I glamped, which is close to camping, but the wifi works, and there is a hot tub. Regardless, the following crossed my radar, which nearly caused me to spit out my chilled sparkling (water) when I saw it on Monday:
In human, that simply translates to a large swatch of technology hitting new record highs in the public markets, and, in this case, likely all-time value highs.
Observe how differentiated the companies present in that list are.
- Amazon is from the dotcom boom.
- Alphabet is from the post-dotcom interregnum.
- Facebook, the breakout social company, went public nearly a decade and a full recession after Alphabet.
- Tesla is included, which has yet to find sustainable profits.
- Netflix, the Quickster-rebound that pours capital into, of all investable possibilities, consumer film content.
It’s a diverse group that the market is more than willing to send to record highs en masse. Investors looking for growth continue to push tech stocks higher, and in some ways, it’s becoming ridiculous.
How silly? Let’s find out.
By now, you have heard the acronym “FANG,” which translates to Facebook, Amazon, Netflix, and Alphabet. The last entry is the “G” in “FANG” as Alphabet retained its ticker symbol “GOOG,” more or less, when it fractured itself into several pieces overseen by a holding company.
Regardless, I snagged us a chart of the FANG companies performance year-to-date. It’s unnerving:
Alphabet, in last place, is up more than a fourth. Amazon, in the lead, is up more than a third. And it’s barely June.
So after all our work discussing the repricing of recurring revenue, and revenue multiples, and the gap between private and public valuations, we can see here public markets not copping to the very rules they set down for smaller, newly-public tech shops.
Summarizing quickly, growth-oriented tech companies that also manage to be large-cap equities are on a tear, showing dramatic market faith in tech.
Now, let’s get weird.
Out this morning in the Wall Street Journal is a tidy piece on China’s tech rally.
As we just discussed, the recent appreciation of FANG companies is troubling given the rapidity of their ascent. How much faster can we move?
The pieces notes that the FANG shops “have each gained more than 20% so far this year, propelled by strong earnings growth and overall investor enthusiasm for technology stocks.”
Yet the results pale compared to some high-flying Chinese tech shops that also sit atop sizable market caps. Indeed, Tencent and Alibaba “have each surged more than 40% so far this year and hover around record highs.”
The Journal made a prettier chart to boot:
That makes the FANG chart look tame.
This goes to show that the rally we are seeing at home is not occurring in a vacuum. This helps us better understand the boom in various local markets for startups. Where leading tech shops are climbing 40 percent in a year, things are going to be hot.
Now the fun question: What happens when everything stops going up?
From the Crunchbase Daily:
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Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.