So what is the long-term (3-5+ years) thesis for any high-P/S growth stock, when you see ZM, SQ, SHOP, OKTA, TWLO, SE, DOCU, UPST, ROKU, NFLX, META, SNAP, and countless other former stock darlings all back to 3-4 year lows?
With the exception of UPST (too young/little) and SNAP (too shaky) most of those are still growing and entrenched businesses.
Their growth rate slowed. That is it.
If you needed more proof that the game being played, especially from 2017-2021, was all about momentum and multiple expansion vs reality, I don’t know what to tell you.
- If stock growing at X, then buy no matter the price/valuation. Valuation don’t matter.
- See #1
Now we have people, despite being 3/4 thru the year 2022, still touting port gains since 2020 to show their method works.
I think the method does work, but either when a company is more unknown and/or in a bull market.
When companies start IPO’ing at $10b-20b+ mkt caps with P/S at 30-40+, you basically missed out on some of the easy gains. The venture capitalists (private money) benefitted.
TTD in 2017 and thru about May 2018 still made sense. Under-appreciated and under the radar. TTD is over-priced at the moment, but could drop 50% from current levels and still be a huge winner from early May 2018.
You can’t do that with SNOW or DDOG or ZM. All IPO’d at expensive levels, due to the then-known hype around SaaS.
Covid market’s irrational, and still not completely reversed, moves were an aberration. Instead, they were taken as confirmation of an investing model.
When you look at a group of numbers like this, do you really have to work hard to see which is an anomaly? 35, 70, 45, 250, 35, 60. See what I mean?
Take that same mindset and apply it to NFTs or crypto or SPACs, etc etc… Just a bunch of gambling.
I am keeping my eyes out for another TTD, but really hard to spot at the moment. Mostly cigar butts and broken toys out there.
Dreamer