Tech Stock Pulse Check: Feb 2022
Weekly updates on the innovation economy.
The following newsletter breaks down the current status, or “pulse,” of several popular technology companies. Readers and investors often ask what’s happening in the publicly-traded tech sector - this is intended to highlight measurable changes on a month-to-month basis.
Company Cohorts
Cohorts are broken down into three categories: FANGMAN, Large Technology Companies, and Software Companies. The companies that comprise each category are as follows:
FANGMAN Companies
Large Technology Companies
Software Companies
*Note: Market data as of 2/4/2022 and is sourced from Koyfin; some values have been rounded to the nearest whole number for visual clarity.
Multiples (EV/ NTM Sales) – Enterprise Value to Next 12-Months Sales
Percent Below 52-week Highs
Percent Above 52-week Lows
Relative Strength Index (RSI)
Upcoming Earnings Dates
Closing Thoughts
Buying opportunities in the technology sector are present but mixed.
Since our previous months’ Pulse Check, large stock price moves have occurred in a handful of names, with EV/ NTM Sales multiples contracting for most FANGMAN, Large Technology, and Software companies.
Many software companies with competitive business fundamentals are just marginally above their 52-week low prices, suggesting that strong buying opportunities may be available for select companies in the cohort.
Our last Pulse Check highlighted the oversold nature of several software companies in this cohort - these were either at or below an RSI of 30. A large number of those companies now sit at a midpoint between overbought and oversold. This suggests that on a short-term basis, entry points for some of these companies may be less attractive.
We believe that throughout 2022 we will continue to see a gap in stock price performance between good and great businesses. Tactically overweighting select names could prove to be a winning strategy for the year.
This letter is not an offer to sell securities of any investment fund or a solicitation of offers to buy any such securities. An investment in any strategy, including the strategy described herein, involves a high degree of risk. Past performance of these strategies is not necessarily indicative of future results. There is the possibility of loss and all investment involves risk including the loss of principal.
Any projections, forecasts and estimates contained in this document are necessarily speculative in nature and are based upon certain assumptions. In addition, matters they describe are subject to known (and unknown) risks, uncertainties and other unpredictable factors, many of which are beyond Drawing Capital’s control. No representations or warranties are made as to the accuracy of such forward-looking statements. It can be expected that some or all of such forward-looking assumptions will not materialize or will vary significantly from actual results. Drawing Capital has no obligation to update, modify or amend this letter or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.
This letter may not be reproduced in whole or in part without the express consent of Drawing Capital Group, LLC (“Drawing Capital”). The information in this letter was prepared by Drawing Capital and is believed by the Drawing Capital to be reliable and has been obtained from sources believed to be reliable. Drawing Capital makes no representation as to the accuracy or completeness of such information. Opinions, estimates and projections in this letter constitute the current judgment of Drawing Capital and are subject to change without notice.