One of the biggest stories this past week (and what may turn out to be one of the biggest stories of 2018) has been Mark Zuckerberg’s testimony before U.S. congress. While the stock of Zuckerberg’s company Facebook Inc. (NASDAQ:FB) has rebounded approximately 5% from lows seen approximately a week earlier following a series of scandals which has hurt Facebook shareholders, questions as to whether Facebook, and the tech sector as a whole, remain solid long-term investments at current levels has turned into somewhat of a debate.
On one side are the tech bears, believing that the recent volatility in technology stocks represents overvaluation for the tech sector as a whole. After all, if FAANG companies really were bullet proof, would investors not be chomping at the bit to get in on the action at lower prices?
Zuckerberg’s performance may have been stellar, but the lack of a meaningful rebound in Facebook’s stock price, and many of its peers, has some believing investors may finally be questioning the valuations which have been ascribed to the sector.
The bulls will note that we are still in a bull market, and sentiment remains near all-time highs. With U.S. corporate tax changes affecting the long-term earnings generation abilities of U.S. companies, betting on "America first” may still be the way to go for some time. While tech companies may be expensive, buying firms such as Facebook on dips such as these could be very profitable.
On the whole, I believe that valuations have gotten ahead of earnings, at least in this current environment. I would wait to see how this upcoming earnings season impacts the tech sector overall before considering any of the big tech names at this point in time.
Invest wisely, my friends.
Tech Insider
