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Generally companies without a solid business are risky. Netflix IS there - their idea is very valid (customer myself, I love them), but they run a huge deficit and it is unclear whether this will play out or not. Tesla is risky - the concept is amazing, but look at how much money they burn and how high their debts are.
Amazon - so far they quite nicely manage to reinvest their huge profits, but they (a) are profitable, (b) it is not something others can easily copy (logistics centers) and (c) they have some income streams (like Microsoft, Azure turns into a huge profit center).
Compare that to Apple - (a) very profitable, (b) unclear how the future looks as they (c) mostly depend on one income stream (iphone sales). While I would be sure they survive as a company, I sort of love saying there is no way to justify their price and unless they come up with alternative revenue streams, their upside is limited.
The point about tech companies is that most (a) are unproven and often come with (b) unproven models. Also (c) they can easily get sidetracked. Look at AMD - they have an amazing processor lineup now. Many years ago their Bulldozer architecture flopped and it took them a long time - and doubting their survivability - until they managed to pull off the ZEN architecture. High risk - one wrong step and you may lose a lot of money.
The reason I think people call tech stocks are risky is that by some measures they are. Take Netflix ($NFLX), the company is currently trading at more than 200x their current earnings. So that tells you lots of the upside is already "priced in" as they call it. Also, $NFLX market cap (total value) at the moment exceeds the value of Disney, while disney has a revenue of 9 Billion dollars in income (+multiple revenue streams) compared to 749Mil for $NFLX.
In general Tech stocks have high P/E. Some even have very little profit. So these companies depend on growth. The moment they stop growing/stall growth/ stop growing their valuations will suffer. And these swings add to your portfolio volatility. (another way to measure risk is how hard the value of your portfolio swings up and down).
PS: there is an etf out there called QQQ and they go passive on the nasdaq 100 (mostly tech stocks) so check that out if you want exposure to tech. It's cheaper and less risky (due to diversification than owning one (expensive in USD) share of amazon or netflix.)
In 2018, MySpace is a footnote. Even the people with accounts there don't bother to use them. They all moved to Facebook. And of course now people are talking about moving away from Facebook. If that happens, Facebook would go from being one of the big four tech companies to just another footnote.
It's not so long ago that there was a huge battle between Blu-Ray and HD DVD for determination of who would be the HD recording format of choice. Supposedly Blu-Ray won. But Netflix moved to streaming instead of Blu-Ray. Blu-Ray is still the medium used for recordings, but most people don't bother with recordings. They just stream.
When I had Netflix, I used it about equally for original content and distributed content. This suggests that someone else could jump in with their own original content and I would stream them. And the distributed content could move easily to a different platform. For example, Netflix and Amazon have been fighting over the Dr. Who streams.
What if Dr. Who said a pox on both their houses and went full on cable? Or BBC America dropped cable and became a streaming service? If every supplier did that and Netflix had some original content struggles, Netflix could become a footnote.
Is really also asking, what actually is a tech stock? At the turn of the century the automobile was a leap forward in human technological prowess, now that's the auto sector. Ford is an Automotive company, does Ford innovate technology anymore? Probably, to some extent I'm sure various manufacturing processes are improved but it's just an Automotive company. You certainly don't think, OH YEA Ford is a tech company because remember 100 years ago when Henry Ford figured out a production line?
You can go down the list. What is a tech company? To my mind, a tech company is an organization that exists for R&D. It employs engineers and scientists and other nerds to research things, then develop a product/solution/fix for whatever externality the research uncovered. This sort of business is risky because your research may never uncover anything interesting and the product you spend time developing might not have any market viability. I think calling Twitter a tech company just because the business fully relies on the internet, would be like calling FedEx an aerospace company because it relies so heavily on planes.
Some tech companies take a different approach, providing something people like first and looking for ways to profit second. Paul Graham of Y Combinator has recommended this course in his essays. Facebook appears to have concentrated on being widespread and indispensable before trying to be profitable. This approach has advantages (it's really hard to profit from something people don't like), but it's a two-step process and the second step can be iffy.
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