Does This Fall Make Any Sense?
Happy Friday all!
Thought I’d write a post exploring the recent selloff in stocks over the past week and why it seems strange.
To start off with, many of the companies in our portfolio reported better than expected earnings or at least in line with expectations.
$SOFI (SoFi Technologies Inc) earnings 🏦
$0.13 EPS vs $0.11 expected and $1 billion in revenue, in line with expectations.
$4.66B revenue forecast for 2026 (vs $3.6B in 2025)
Stock is down 29% in the past month
$PGY (Pagaya Technologies Ltd) 🔃
Earnings $0.80 EPS vs $0.35 expected and $335M in revenue, missing the $349M estimate by ~3%.
$1.4B–$1.58B revenue guidance for 2026 (vs $1.3B in 2025).
Stock is down ~34% this month
$SHOP (Shopify Inc.) 🛒
Earnings $0.48 adjusted EPS vs $0.51 expected
$3.67B in revenue, beating the $3.59B estimate.
Q1 2026 revenue guided at low-thirties % growth YoY, above the 25% analysts expected.
Also announced a $2B buyback.
Stock is also down ~34% in the past month
Even with AI seriously disrupting the software industry, these price moves seem to make little sense. These aren’t pure software based companies like $ABC or $ABC. They have highly regulated & difficult to replicate businesses behind them that all seem to be doing extremely well.
One of my biggest takes on investing (and many things) is that the reasons for things happening are always overdetermined and far too complicated to understand than what it’s made out to be in the media.
$SILVER is a great example after it shot up last year because of growing demand for AI and uncertainties in the global economy. That demand and those uncertainties presumably are still around, maybe even moreso over the past month, and yet during that period it’s fallen 18%.
Obviously this doesn’t apply to commodities but if the underlying business in the companies we’re investing in is perfromign well, I really see no reason to worry about the stock price. It makes thing much easier and, at least for the last 9 years, has been the right way for us to think about our portfolio and has rewarded me and my copiers well.
We saw a huge fall around March/April last year due to Trump’s tariffs, ignored it and more than made up for it over the rest of the year (same in 2018, during Covid, and August - October 2023). I suppose you could argue this was the wrong thing to do in 2022, but there was no way to know that at the time and again, we’ve more than made up for it since. I won’t go into all the “miss the best 10 days” vs “miss the 10 worst days” stuff but it’s here for anyone interested - www.amsria.com/videos/v/market-volatility-10-best-days-vs-10-worst-days
Perhaps this time it is slightly different. The uncertainties brought about by the mindblowing improvements in AI over the past 2-3 months (if you haven’t used any of the LLMs since then, then you really don’t know what you’re missing out on) are real. AI is definitely getting closer to the point where it seems it will be able to do anything a human can do on a computer.
The impact this has on the job market isn’t really clear yet but hopefully we’ll be able to adapt. I read 2 articles yesterday which I’ll link to below, one saying we won’t and one we will. At the moment we of course don’t know which is right but we’re going to find out soon.
https://shumer.dev/something-big-is-happening
www.linkedin.com/pulse/something-messy-happening-ai-panic-asking-better-ann-handley-ywz1e
To conclude, I think the recent selloff in tech is way overdone. Pure software companies might be in trouble longer term, although strong arguments can be made for & against even this.
But, assuming AI doesn’t just totally upend the global economy some time soon, I don’t see how the companies in our portfolio don’t reap the benefits from it and I’m not at all worried about their falling shares price.
From 2018 - 2025, I had one of the highest returns of all Popular Investors - etoro.tw/4b3pl7o
Check out my profile to learn more about my investment strategy and if you have any questions, feel free to leave a comment below. Thanks for taking the time to read this! 😀
Harry
Disclosure: This is my personal analysis and not financial advice. Always do your own research.... Show More
This recent shopify drop is the most retarded Wall Street take I’ve ever seen after NIO at 60 dollars per share ... Show More
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