With retail investors challenging institutional and hedge fund short-sellers en masse, some are beginning to wonder whether the stock market, tech stocks, in particular, have entered a dangerous bubble phase.
On the surface, at least, it appears so: Seemingly over-extended valuations. Extreme volatility. Opaque business plans. Blank-check IPOs. Snowflake SNOW.
While it may look and feel eerily familiar, we are not in another 1999-like tech bubble, and we are certainly not headed toward another 2000-like bubble bust, Wedbush Securities’ Managing Director of Equity Research Dan Ives told TheStreet.com.
“Ultimately as an analyst that saw the 1999-2000 bubble burst to where it is today, I’ve seen it up close,” Ives said. “But if I go back to 1999-2000, it was pie in the sky stuff.
“Today, you’re talking about cloud, EV, cybersecurity, e-commerce — these are trends that are happening today. We’re talking about $2-$3 million of incremental spend that investors are trying to value. And of course, Covid-19 has accelerated the growth prospects by two to three years in some cases.
“But this is definitely not 1999 or 2000. My view is that the re-rating is going to continue to happen in tech as investors catch up to valuations. We’re just at the tip of the iceberg in terms of where technology is going next and what kind of impact it’s going to have.”
