“While I acknowledge that valuations look a lot better than they did in December, I don’t think this is the bottom,” said Violeta Todorova, senior research analyst at Leverage Shares. “I have been tempted to buy this dip, but there’s still so much uncertainty out there, and I think things will get worse before they get better.”
In the recent market selloff, the valuations of big technology companies have fallen from the lofty heights. Many traders, though, are betting that the declines may well have further to go, and recent history offers evidence to back them up.
The price that investors are paying for anticipated earnings from the so-called Magnificent Seven companies hit the lowest level since September this week as the broader S&P 500 dropped 10% from its recent peak. But these valuations are still far from the lows reached in 2018 and 2022 when the profits of tech giants were under pressure, and there are now more factors clouding the horizon.
