Disruptive technology

Monthly Valuation Overview – January 2023

DAVY VIEW

After the exuberance of 2020-2021, which saw valuations entirely decoupled from fundamentals, and the subsequent plunge in share prices across our coverage in 2022 – it is clear that in 2023 valuation matters once more. In our new monthly valuation product, we provide an overview of key metrics across our three core sectors: E-commerce, Online Marketplaces and Software & IT Services. In the 18 months since the peak of these long-duration assets, consumer-facing names have been hit hardest, with the e-commerce index down 72% and the marketplace index down 50%; the more B2B-centric UK software group has fared relatively resiliently at ‘only’ -23%. 2022 was a tale of two halves. In H122, there was vicious multiple contraction from the exorbitant 2021 levels, as the realisation that non-transitory inflation would require unprecedented rapid interest rate hikes. Then in H222, a combination of squeezed consumer demand and supply side cost inflation drove down earnings – further downgrades are likely in H123. The past few months have seen some respite in price trends, but is anyone brave enough to call the bottom here? See the link to our full presentation below.

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Feb 2 2023, 07:10 GMT

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