There Is No Technology-Stock Bubble

Many technology firms remain unprofitable but the comparisons between today's tech stocks and those of the 90s is not warranted, says Morningstar columnist John Rekenthaler

John Rekenthaler 22 May, 2019 | 8:27AM

You can hear the whispers. Technology companies cost far too much. The five FAANG stocks drive the entire stock market (Facebook, Apple, Amazon.com, Netflix, [Alphabet] Google). Investors have become obsessed with “unicorns” (privately held technology firms that are valued at more than $1 billion). Some openly ask the question: has the New Era returned?

This article’s headline reveals my belief. I do not believe that the comparison between the current technology-stock marketplace and the overheated period of the late '90s is warranted. 

To be sure, there are some similarities.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Lyft Inc Class A28.88 USD-5.37
Uber Technologies Inc30.46 USD-1.23

About Author

John Rekenthaler

John Rekenthaler  is vice president of research for Morningstar.

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