SAN FRANCISCO—Deep losses in Amazon Inc., Apple Inc., Facebook Inc., and Alphabet Inc. have left the former tech favorites at their lowest earning multiples in years, offering potential bargains to coldblooded investors looking to buy stocks at a time of heightened fear.
Plummeting stock prices in recent months have mostly outpaced a simultaneous decline in earnings expectations, presenting potential opportunities to buy beaten down stocks. But apparent bargains could turn out to be expensive if earning expectations take a turn for the worse next year as the United States continues its trade dispute with China.
Netflix has slumped 20 percent since early October, while Facebook and Amazon are both down over 10 percent. Alphabet, the least badly performing of the group, has lost 9 percent, a little worse than the S&P 500’s 8 percent decline.
Tech investors have also become more concerned about a global smartphone market that is losing steam, but the resulting drop in Apple’s stock has outpaced analysts’ reduced earning expectations. Apple and other big tech names are trading at the lowest multiples of their prices to expected earnings in years, suggesting recent selling might be overdone.
“There are some attractive buying opportunities,” said Jake Dollarhide, chief executive of Longbow Asset Management in Tulsa, Oklahoma. “We are buying Microsoft, and we could add some Apple and some Alphabet at these levels.”
Facebook, plagued for months by criticism of its use of people’s personal data and fears that it could face more regulation, recently traded at 19 times expected earnings, its lowest ever. That compares to a multiple of 45 times after Facebook went public in 2012.
“The question going into 2019 is, ‘Are you seeing enough of a pullback in those sectors that led that would entice investors to accept the lower valuations as an opportunity?’” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.
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