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Subject:  Bargain??? Date:  6/9/2021  4:19 PM
Author:  DoctorDoom Number:  12318 of 12549

TMF jumping on this narrative that growth stocks are unfairly beaten down and currently are bargains?

This article on growth/cloud valuations is a couple weeks old, so likely valuations even higher now, as we haven't had a drawdown in a bit, like we had in early and late March.
When looking at overall median cloud software multiples - we are still 35% above pre-covid highs, 64% above where we were on Jan 1, 2020, and 33% above the previous peak in August 2019.

Looking at high growth software median only - we are still 77% above pre-covid highs, 109% above where we were on Jan 1, 2020, and 39% above the previous peak in September 2019.

Masks are off. Offices are reopening. Normal, or New Normal, is coming. The always-unsustainable increase in multiple given to cloud/saas/growth during covid was not a permanent loan, and Doom's Law of Regression to the Mean (DLoRttM) states it must be returned.

PATH went public in April at $56 and is $70 now. And multiple over 50. That is a bargain? What...they are growing 60% or something? Quick - someone tell ESTC they should have been at $200, like, in Summer 2019.

MSFT took 15 years to retrace their highs from 2000. Was a great CAGR from, say, 2009 to present, but not as much from early 2000 to present. same with Amazon. So valuation always matters.

Robert Plant was right...I am crazy on a ship of Fools.

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