When someone says companies like this will lose 75% (!) of their value “between now and the next recession”, he really hasn’t bothered to learn anything about the companies being discussed
We are in a great bull market, economic conditions are great, IT spending are great. So the companies are investing/ spending in new technologies. Now, in a recession, the first thing a company does is cut its IT spending.
Now, one of my holdings AYX, is valued at $3.6B for $163M revenue, i.e., 22x sales, not profit, just sales. So in recession if the sales growth crawls to low single digit, what kind of valuation this stock will trade? $20, $18? $15? At $15 that will be $1 B valuation for a company doing $250m revenue and losing money at operating level is rich valuation.
I could be wrong my math tells me that is about 72% decline in stocks. I am not saying it is going to happen, but it is possible.