It’s All Relative!

Insights by Peter Watson.

For avid investors in the stock market it has been a somewhat torrid time of late.

Technology stock in particular have declined – with the tech focussed NASDAQ down as much as 30% at times this year. Our own FTSE techMARK 100 index has been down c.20%.

Both indices have shown some recent recovery but it is only when viewed on a 3 year basis that the truth comes out.

The above graph shows the NASDAQ over a 3 year period. The growth following the Covid recovery can be seen clearly. Whilst it has performed poorly in the last 6m, longer term holders will be much less worried as the current level is equivalent to the position in around Nov 2020.

The FTSE techMARK shows something similar.

So why is this relevant? It demonstrates that fundamental value has been retained, and we believe this is even more true for private company valuations. In an inflationary environment investing in cash generative private technology businesses looks like a good thing to do – and this is reflected by the ongoing strength of the market.

If you would like to find out more about the current state of M&A in the tech market, how tech businesses are valued and how to increase the value of your own tech business prior to selling, please join our virtual seminar in October.