How about these numbers reported last week in The WSJ:
Young technology-company stocks fell out of favor in the blink of an eye. But their valuations remain sky-high and many investors say they have a lot more room to decline before bouncing back.
Cybersecurity firm FireEye Inc. has tumbled 72% from its peak March 5, the day the tech-heavy Nasdaq Composite Index hit a 14-year high. Meanwhile, advertising-technology firm Rocket Fuel Inc. is down 61%, software firm Splunk Inc.is off 50%, microblogging service Twitter Inc. is down 41% and electric-car maker Tesla Motors Inc.is off 28%.
The selloff began abruptly in early March, with traders saying there was no single reason sparking the collapse. The losses have been concentrated in what had been the market’s hottest names, particularly Internet, social-media and biotech stocks.
Money managers say it is no mystery what has been at work: These stocks rose to stratospheric prices compared with their earnings outlooks, driven by so-called momentum traders such as hedge funds that pile into rising shares. But these firms were equally quick to hit the sell button.
Now, many investors say valuations are still so rich that further declines are still in store. Tesla trades at 89 times next year’s earnings, according to FactSet. That is down from a price-to-earnings multiple of 117 in March, but still about six times more expensive than the S&P 500. Daily-deals site Groupon Inc.trades at 35 times next year’s earnings.
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