HomeFinancial MarketsTech Valuations Down to Reasonable Levels, Says Slack Founder

Tech Valuations Down to Reasonable Levels, Says Slack Founder

Slack founder Stewart Butterfield praised the decline in tech stock valuations amid the ongoing interest rate hike in response to growing inflation. According to Butterfield, lower valuations will restore investor interest in tech stocks.

Butterfield remarked that the last six months have been “pretty rough”, adding that economic uncertainty has decreased investor confidence. Goldman Sachs managing director Eric Sheridan agreed with this sentiment, adding “Tech, by its very nature, is a risk-premium, risk-on category of investing. And when people are uncertain about what’s the rate of inflation, what’s happening in the macroeconomic environment, what is the Fed going to do — it all trickles into the conversation and it creates uncertainty.”

The Federal Reserve raised interest rates by 75 basis points in September; the third such hike since June. This has soured investors’ outlooks, triggering a large-scale selloff of tech stocks this week including the likes of Alphabet, Amazon, AMD, Intel, Meta, Microsoft, Nvidia, and Spotify. The Nasdaq Composite shed 5% as a result.

Slack was acquired for $27.7 billion by Salesforce in 2021, where the communications platform has since been a major driver of growth with innovations such as Canvas.

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