over 2 years ago • 1 min
Shares of companies from Asos to Zalando and Logitech to TeamViewer have all suffered steep losses after their results or guidance last quarter disappointed investors.
Investors had previously flocked to these pandemic winners, buying into companies that can grow their earnings no matter the cost and pushing up their stock valuations to extreme levels. Just look at the forward price-to-earnings ratio of European tech stocks compared to the wider market.
But with high valuations comes high expectations. And when those expectations weren’t met, investors hit the exits. Part of the reason why investors are less forgiving today is because of rising competition for their hard-earned investment dollars. After all, there are plenty of cheaper stocks, think pandemic underperformers, that are starting to see their sales growth rebound as lockdowns ease in most of Europe.
So if you’re invested in any pandemic winner stocks with high valuations, watch out for increased volatility and potential sell-offs – especially during the days the companies report earnings or provide trading updates.
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