What should investors do about tech stocks? That is a big question. After an extraordinary run over the last couple of years, things have a hit a real rough patch. Worries about regulation loom. With that said, Goldman Sachs is optimistic on some large and midsize tech stocks. One of its high conviction picks is Netflix, which is down around 30% recently. Goldman is steadfastly a believer, however, saying “We believe Netflix represents one of the best risk/reward propositions in the Internet sector”. Other names to look at from Goldman include Expedia and Etsy.
FINSUM: What we like about these three names is that they seem the least likely to be impacted by any new privacy regulations.
2015 has been a much slower year for IPOs than many hoped. Big companies like Uber and Airbnb have not gone public, and a sagging market for young public companies might be part of the reason. The Bloomberg IPO index, which tracks new companies for one year following their IPO, is now down 20% on the year despite huge opening surges for companies like Etsy and Lending Club, which jumped 87.5% and 56.2% on their opening days, respectively. Both stocks are now down more than 11% from their offering prices. However, despite the poor market, there still could be some notable IPOs this year, including from high profile payments provider Square.
FINSUM: It has been a rough year for IPOs and young companies. However, this does not seem to have hurt high-flying private tech company valuations, which goes to show just how much the venture capital investing paradigm has changed—IPOs are no longer the goal.