The “tech” has become the unloved of the Stock Exchange. Praised during the health crisis, tech stocks are suffering as the era of free money comes to an end.
The toughest is yet to come for the tech sector, according to businessman Orlando Bravo | Photo credits: © Copyright 2013, The NASDAQ OMX Group, Inc.
“Tech” is not at the end of its suffering. The warning is not issued by a quidam but by Orlando Bravo, the main partner of the Californian private equity firm Thoma Bravo. “I think there’s more pain to come “, he launched during the show Squawk Box Europe on CNBC, Thursday, June 16. The recent stock market debacles of the behemoths Apple, Microsoft or Amazon, which have plunged from 26% to 37% since the 1er January, and the switch to the “bear market” of the Nasdaq Composite index, would therefore only be the beginning. The monetary tightening that is gradually taking place around the world, in an attempt to control galloping inflation, is making “tech” stocks, which have large financing needs, less attractive.
The market doesn’t want it
” When these companies really start answering investors’ questions about the path to profitability, operators may not like what they hear. “says Orlando Bravo. In fact, “tech” stocks, surfing on the euphoric environment of low interest rates in recent years, have had the bad habit of favoring rapid growth over profitability. However, today, the era of free money is over. ” [La rentabilité] involves a lot of cost cutting, so a lot of pain, analyzes Orlando Bravo. This is difficult to obtain, especially when one is exposed to public opinion. Bertrand Lamielle, of Portzamparc Gestion, will not contradict him. For the expert, the timing is not a good time to invest in technology stocks. From an operational point of view, they do not encounter any major difficulties, with a few exceptions, such as the specialist in high-end connected exercise bikes Peloton, they are even full of cash. ” Everything is going well for them, but the market no longer wants them. He has moved on and logically takes his profits on these securities “, he analyzes.
Fintech Klarna in trouble
The lack of love for technology companies is perceptible on the stock market but also in the world of private equity. Swedish split payment (or “buy now, pay later”) company Klarna is struggling to raise additional funds. According to the wall street journalthe fintech is currently in discussions with its investors to complete a funding round of 500 million dollars, half of what the company hoped to raise initially.
PC