Overvalued Tech Stocks Lose Market Value Again Today


Sep. 10 2019, Published 10:47 a.m. ET

Yesterday, several overvalued tech stocks—including Alteryx (AYX), Twilio (TWLO), and Okta (OKTA)—lost significant market value. The downward spiral has continued today as investors remain wary about valuations and growth.

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Alteryx is down over 18% in two days

Data analytics company Alteryx’s (AYX) stock price is down over 2% today. The stock is currently trading at $117, which is 20% below its 52-week high. Alteryx investors have now lost close to 20% in the last two days.

Alteryx has now returned nearly 100% year-to-date despite the pullback today. The stock is trading at a forward PE multiple of 147x, which might still seem expensive.

Shopify is still overvalued

Canada’s high-growth tech company Shopify (SHOP) has lost over 3.5% today. The stock is trading 15% below its 52-week high and has lost close to 12% in the last three trading days. Shopify continues to trade at a premium and has a forward PE multiple of 365x.

Analysts have a 12-month average target price of $361.62, which is 4% above its current price. Shopify has returned 152% year-to-date and has gained 1,200% since its IPO in 2015.

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Twilio trading below 200-DMA

Twilio (TWLO) is down over 1.4% today. The stock is currently trading at $110.20, which is 27% below its 52-week high. Twilio investors have lost over 17% since September 4.

Twilio has returned 23% year-to-date despite the recent pullback. The stock is trading at a forward PE multiple of 354x, which indicates that it might decline further. Twilio is trading below its 200-day moving average.

Okta: Attractive after pullback or still overvalued?

Shares of Okta (OKTA) are down 2.7% today. OKTA is trading at $107.07, which is 24.5% below its 52-week high. Okta investors have lost 14% in the last three trading days. Similar to other overvalued stocks on this list, Okta has generated impressive returns and is up 68% year-to-date.

The Trade Desk: Will it move higher?

The Trade Desk (TTD) is a digital advertising pioneer. TDD stock has declined 2.1% today and is trading at $209, which is 28% below its 52-week high. TTD has returned 80.4% year-to-date despite falling 13.7% in the last three days. The stock is trading at a forward PE multiple of 57.7x. This indicates that TTD might decline further, considering its five-year EPS growth of 30%.

High-growth tech stocks tend to be volatile and have a high beta. Some of the stocks mentioned here have generated multifold returns, which led their stocks to be overvalued and expensive. The growth story for most of these stocks remain intact, and these companies have enough long-term revenue drivers.

Market Realist analyst Aditya Raghunath does not hold positions in any of the stocks mentioned above


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