WORLDVIEW: Do WeWork & Uber show growth is over, value’s back?
For the last ten year or so, global markets have been dominated by one thing: growth. I don't mean growth as in rising stock prices – although that has been happening and is a factor – I mean growth as in high-growth companies.
Companies like Amazon and Facebook kicked off the trend by delivering almost unbelievable annual rates of revenue growth and – in the cases of platforms like Facebook and Google at least – unbelievably juicy margins. Early investors in these current giants often came in when profits were low or non-existent, and benefitted from a rapid and prolonged rise in the share price that mirrored growth in revenues and margins.
Understandably enough, this got investors excited. Everyone was on the lookout for the next big thing, the next growth stock that would achieve a similar run. Investor focus shifted from the bottom line to the top line – instead of worrying about profitability, the key metric became growth, especially how fast a company was growing its user base and revenues. Being a "tech" company helped.
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