Venture capitalist Marc Andreessen is making headlines today for comments he made at a tech conference hosted by The New York Times in which he said that some technology stocks are undervalued. The Netscape founder noted that the values of some tech companies, like Google, are grossly undervalued and that there’s a negative perception on Wall Street as it relates to some of the companies.
“These are big companies with a lot of cash,” Andreessen reportedly said. “The public market hates technology.”
Interestingly, Andreessen is one of the guys who some blame for inflating the values of privately-held tech companies in the first place, operating his VC firm Andreessen Horowitz. Among his portfolio companies are Zynga, Groupon and Facebook.
Each of those companies has taken it on the chin in the public markets. Facebook shares are down more than 27 percent since its IPO, and Zynga and Groupon are off 68 percent. (Facebook is still valued at about $60 billion).
As Andreessen sees it, tech stocks are getting treated like steel mills that are on the brink of bankruptcy, not high-growth opportunities. As an example, Google has a price-to-earnings ratio of about 20. (However, a clear counter example is Amazon which now boasts a market value of $114 billion, and a price-to-earnings ratio that’s off the charts at more than 3,000).
“That’s what we’re fighting in the Valley. “No one believes, no one wants to believe.” ” said Andreessen, who is encouraging companies to hold off on IPOs.
Among Andreessen’s companies are Bellevue-based Apptio, which commanded a $600 million valuation after its $50 million venture round earlier this year.
So, what do you think? Some Seattle area tech stocks have done well in the past year, like Expedia, which is up over 100 percent and Concur, which has gained more than 33 percent. Others like F5 Networks are showing double digit declines for the year, while others like Microsoft are showing minimal gains.
Is this a good time or a bad time to be investing in public tech stocks?