Summary List Placement
- Former Twitter CEO Dick Costolo told CNBC that platform stocks are “crazily priced” and remind him of the dot-com era in the early 2000’s.
- “Zoom is a great company but at $US125 billion you have to raise an eyebrow,” he said.
- Costolo added that the market is underpricing the risks of the election and rising tensions between the US and China.
- Read more on Business Insider .
Former Twitter CEO Dick Costolo told CNBC on Wednesday the year-to-date returns on platform stocks are “crazy” and remind him of the dot-com bubble of the early 2000s.
“Things are crazily priced,” said Costolo, who is now a partner at Index Ventures. “I mean, Zoom is a great company, but at $US125 billion you have to raise an eyebrow,”
Costolo said he mentioned platform stocks like Twilio and MongoDB to CNBC earlier in the summer, but he’s “less excited” about them now because of the high valuations. Twilio’s stock is up 170% this year, while software company MongoDB is up more than 85% over the same period.
“I’m not saying I’m a pessimist and abandon ship, I’m just saying be a little more careful,” Costolo said. “There are going to be a lot more platform stocks.”
He continued: “There are opportunities for the Twilio of apps to emerge. There are opportunities for collaboration platforms for remote work that go well beyond Slack and Zoom.”
Costolo said that platform companies in Series A and Series B funding rounds are emerging, but reiterated that the current return on platform stocks is reminiscent of the tech bubble of the early 2000’s.
He also said he’s worried because investors are all thinking “what could possibly go wrong?” and diving into stocks without thinking about risks like the election and rising tensions with China.
“I think the market is really underpricing risk around election, it’s a good time to be a little bit more cautious, ” he said. “Every possible positive scenario is priced into the bull case, and we’re ignoring the bear cases around market risk, macro risk, what ends up happening with China.”
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