BBUS, page-6884

I would be cautious using the dotcom boom & bust in 2000 as a bubble comparison. The issue was valuations at a much higher P/E ratio than would be reasonable even with reliable future earnings, such that growth expectations were astronomical and unrealistic. Add to that many of these companies didn't have a reasonable revenue model and therefore future earnings and it was all hype, no due diligence.

I would not make this same comparisons to the likes of Facebook, Amazon, Apple, Microsoft and Google. They are established companies with reliable long-term revenues and future earnings expectations. They will not collapse in such a way as you saw in the dotcom bubble because of that, hence using the dotcom comparison is a false equivalence fallacy.

It's important to point this out imo, as you might over estimate the downside risk ("This is a bubble just like 2000!"). Im not saying you're doing this, simply sharing my view of caution in this regard. I simply wouldn't bring them up in the same sentence. Again just my opinion.

I do however, think they are currently overpriced comparative to their near-term earnings. Given how massive they are, I worry that their growth potential is being over-estimated, with the exception of Amazon which I wouldn't bet against. Facebook and Google rely heavily on add revenue which, in the coming year+ long recession - will not be as profitable.

Further I do think its a reasonable thing to consider the likes of the BNPL sector to be a bubble where the market may be overpricing what is essentially a merchant service fee business. Yes its a good and profitable business, but i'm not sure you would want to be trading stock in the multiples that are currently being traded when there is a significant downside risk in debt repayment failure (especially during a recession!). It only takes a minor increase in bad debts for them to sink in value. What may be underestimated (and hence a bubble) is that customer can simply walk away with a detriment to their credit score. They also lack the same level of debt-recourse that traditional credit cards hold.