The year 2020 has shaped up to be a very lucrative one for many technology-based companies. The NASDAQ composite has experienced a growth of 40% for this year alone, with more and more companies vying to be publically traded. While the year has been great for some companies and a complete nightmare for others, market watchers have become wary of the following stocks that seem overvalued from tech companies. Let’s take a look at 3 top performers.
Draftkings is an online daily fantasy sport and online gambling provider, with stocks that have almost gone up by 4 times since April this year. The rise in stock value has been attributed to a reverse merger that took place this year as well as the appointment of the renowned Basketball player, Michael Jordan, as a special advisor. Retail investors are anxiously awaiting the approval for legalized sports bet and wagering in many states in the US that will see the company achieving its ambition of holding close to a monopoly of market share. With other big, and highly established, providers such as MGM and Penn Gaming vying for a piece of the pie as well, it seems premature for the Draftkings stock to be so high, trading with a market capitalization of over $14 billion according to analysts.
Tesla bears have been rejoicing at the success that the company has achieved with its stock value this year and it is not hard to see why. On the 1st of May, Elon Musk shared a single tweet that tripled the price of the stock, with the company doing extremely well under Musk’s execution. Achievements aside, the stock is up by nearly 500% last year, which has nothing to do with a few well thought out sentiments. This increase has been linked to the stock split that was announced in August this year. The announcement was meant to get more retail investors involved in the company by increasing the number of stock available and decreasing the price per unit. This attempt has been somewhat thwarted by fractional shares being offered by online brokering firms, making the stock split less impactful than initially intended.
Investors need to keep a keen eye on this coming and what it plans to do in the future. It is clear that Tesla is aiming to be the leader of the looming electric vehicle era but with competition like Volkswagen, it is hard to tell how this will go.
The media and sharing tech company, Twilio, is currently trading at 26 times the sale with a $38 billion market cap. It confounds analysts and experts since the company logged a 53, 3% gross margin for the last quarter, which is nowhere near the market standard right now. In 2020, competitors such as Shopify have shown accelerated growth while Twilio remains in a position that shows their profit margins are actually on the decline. It remains to be seen whether Twilio will be able to make margin investors see why the company is worth the current stock value especially while the competition is doing so much better.
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