The Impact of the modern boom of the digital economy on the Price of Technology stocks, Are we in another tech bubble?

Banji-Owoka, Ibukunoluwa Feyisayo (2021) The Impact of the modern boom of the digital economy on the Price of Technology stocks, Are we in another tech bubble? Masters thesis, Dublin, National College of Ireland.

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Abstract

This paper examines the impact boom of the modern digital economy on the price of technology stocks in the Nasdaq Index, with reference to the past dot-com bubble of the 90s and early 2000s. This research applied fundamental valuation techniques and price multiples on selected technology stocks from the Nasdaq Index from the period of 2017 to 2020. This was performed by applying a regression analysis on the stock price of the selected companies, using the capital asset price model (CAPM) to derive the expected rate of return of the selected companies. Applying a single and Multiple stage Gordon growth valuation model on the selected companies to generate the fundamental value of the selected companies. The research results using fundamental valuation revealed that the selected companies using fundamental valuation are fairly valued. The research applied price multiples such as the Price to book ratio (P/B), Price to Earnings ratio (P/E) and Enterprise Value to Earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), using these multiples revealed a varying result based on multiple applied with the constant being Tesla shares being Overvalued. From the results of the valuation model, the researcher concluded that there is currently no asset bubble in the technology sector.

Item Type:	Thesis (Masters)
Uncontrolled Keywords:	Digitization; Technology Stocks; Nasdaq Index; Dot-com Bubble; Capital asset pricing model (CAPM); Asset pricing; Free cash flow for equity; Gordon Growth Model
Subjects:	H Social Sciences > HG Finance > Investment H Social Sciences > HG Finance > Investment > Stock Exchange
Divisions:	School of Business > Master of Science in Finance
Depositing User:	Clara Chan
Date Deposited:	24 Feb 2022 16:33
Last Modified:	24 Feb 2022 16:34
URI:	https://norma.ncirl.ie/id/eprint/5483

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