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Opinion
Nir Kaissar

Earnings Math Catches Up With the Tech Highfliers

The sector’s stock selloff signals investors have finally realized that future growth can’t justify ludicrous valuations.

The average tech stock in the Russell 3000 Index is down 44% from its 52-week high.

The average tech stock in the Russell 3000 Index is down 44% from its 52-week high.

Photographer: Michael Nagle/Bloomberg

Who could have foreseen the selloff in shares of big technology companies? Anyone who bothered to do a little math.

Technology shares are taking a historic beating. The average tech stock in the Russell 3000 Index is down 44% from its 52-week high, and many are down much more. Of the roughly 400 stocks in the sector, about a quarter are down more than 60%, most of them smaller companies. Big tech hasn’t held up much better, though. Amazon.com Inc. is down 43% from its 52-week high. Netflix Inc. is down 73%.