Both Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc (NASDAQ:GOOGL) reached over $1,000 per share within the past two months, and both stocks have been on the decline since reaching new peaks.
In the case of Alphabet, it broke through $1,000 in June and since reaching a new 52 week high of $1,008 has declined by almost 8%, to just over $930 by the close of Friday. Amazon also reached the four figure plateau in June and went back down only to reach its peak price in late July of $1,083 per share. Amazon, too, has declined since that point in time, dropping to just under $968, for a total drop of over 10%.
This could be a sign that investors have said enough is enough of these high valuations and sold off gains from these high price points. In the case of Amazon, the stock is still trading at a whopping 244 times earnings. Alphabet is not nearly as outrageous with its stock trading at an earnings multiple of just 33.
The stock market in the U.S. has long looked to be overvalued, particularly on the NASDAQ, so a correction might be overdue. However, high multiples are not a new phenomenon, but when prices reach over $1,000 per share it might remind people the of the dotcom bubble and whether there is a bubble forming now with some of these valuations.
It’ll be interesting to see if Alphabet and Amazon will be able to rebound back up to $1,000 or if these corrections will go on for longer.
