Tech rating resets have calmed down. A smaller recovery is underway, led by several large companies, including Apple. If 2021 was a record year for venture capital investment and trillion-dollar market caps, and 2022 was the worst year for equities since the financial crisis, will 2023 be the year of recovery or contraction?
Initial public offerings are unlikely to resume anytime soon. In terms of value, his US IPO activity last year reached his lowest level in 20 years. EY dataSocial media company Reddit, grocery delivery startup Instacart, and fintech Stripe are all gearing up. However, the factors that have dried up the IPO market have largely remained the same. Inflation may have peaked, but interest rates are expected to continue rising.
Even if recession forecasts ease, rising interest rates are weighing heavily on companies reporting high growth but not making profits. Includes listed stocks. Enterprise software-as-a-service companies lost more than two years of market growth last year. But valuations are still high in some metrics. Take Datadog, which provides tools to monitor performance, trading at 69 times his projected earnings. Or the data analytics firm Palantir, which trades at 47x projected P/E.
The tech-heavy Nasdaq index is still above pre-pandemic levels. Expect more announcements of job cuts and other cost-cutting measures this year to convince investors that prices don’t need to fall any further. Even after last year’s layoffs, many companies are still much bigger than they were before the pandemic. For example, Meta announced in November that he would cut 11,000 jobs. But even after this reduction, headcount is still 50% higher than he was in early 2020.
Instead, 2023 may be the year for buybacks. Companies with large cash balances need to demonstrate their strengths to differentiate themselves from other companies. Apple has spent more than his $550 billion to buy back its stock over the past decade. To maintain the momentum of the price recovery, we need to keep spending.
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https://www.ft.com/content/77f63327-829f-4fe5-bc56-fc31436bbd9f U.S. tech stocks: down but not out