February 19, 2021

How profitable is technology? Investor demand for digital stocks is expected to increase with several Canadian IPOs scheduled to occur in the coming months. IT stocks now account for 10.3% of the S&P/TSX Composite index’s value, quadrupling their position over the past decade. Many of these companies are not profitable, which poses questions on valuations – what time horizon and expectations are built into tech stock valuations – and how much of the valuation is attributable to “vision”, expected future products via innovation and “intangible capital”?

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