Will tech stocks recover in the coming months, or will investors need to be patient? In this segment of Backstage Pass, recorded on Jan. 28, Fool contributors Toby Bordelon, Jason Hall, and Rachel Warren share their thoughts.
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Toby Bordelon: Rachel let's go to you. What's your thoughts here?
Rachel Warren: I don't have a ton to add here. I agree I agree with Jon about maybe the changing of terminology. I do think though like is this just because these VC dudes spent so much money last year and so they're trying to put it out in the airwaves of oh my gosh, the tech boom's over and then they can renegotiate these lower valuations. I don't know.
Maybe I'm conspiracy theorizing a little bit but I just feel like this is part of the game. As far as the tech boom or innovation boom or whatever we want to call it, I don't think that's anywhere close to over.
You look at all of the trends that are continuing to drive companies, that are continuing to drive the stock market, look at what's happening in the world. Whether it'd be the world of remote work, whether it be the continued boom of software-as-a-service stocks.
You look at digital innovation and you look at the metaverse if you want to go into that part. All of it goes back to tech. I think it's reasonable on the one hand to say, "Okay, maybe some of these companies are not going to return to the premium valuations they had before."
Some of them, it just may take a while for them to rebound. I think we might be seeing a little bit of a shift back to some of those slower growth value-oriented stocks. But I think as a whole to say that the tech boom is behind us. I think that's just draws it really incomplete picture of where we're at.
I think some companies like Rivian and WeWork that in my humble opinion weren't really worth the price of admission to start with. I'm not really sure that that's going to be a big boom for investors. I could be wrong. Who knows? Maybe they'll be memed. But I think that in a general sense when I think of drawing a circle around all the stocks that I see, the most promising, even healthcare stocks like Teladoc that are leveraging tech in the world of healthcare. There goes another pitch for Teladoc. I think it all goes back to this theme of tech innovation.
Jason Hall: Subtle, Rachel.
Rachel Warren: Subtle right, I thought you'd like that.
Toby Bordelon: You want it to get it out there.
Rachel Warren: Want it to get it out there. It all goes back to the theme of tech innovation. I think valuations, maybe that's going to be a little bumpy for a while. Maybe some of these aren't going to be the high fliers they were before, but I don't think it's behind us at all.
Jason Hall: I think you're right. I just want to weigh in again because there's one point I wanted to make earlier that I missed. I think we're a lot more 2001 right now than 1999. What happened from '97 through 2000.
Imagination and great stories raised capital and nobody was making any money but like 20 companies. Then what happened? The crash happened, recession, a war and then companies made hundreds of billions of dollars over the next 21 years. Here we are and the Internet is we're hosting a TV show on the internet right now for members that pay us money.
There's a lot of figuring that out and a lot of our favorite businesses have been making money. They've been generating revenue. They may be not profitable. That's the difference, were figuring out which ones are going to be able to profitably scale. I think we're closer to 2001 right now in terms of like that next run of tech, that Rachel was talking about then '98 or '99. Toby, I will shut up now.
Toby Bordelon: Always like to hear you weigh in Jason so that's great.