The Importance of Fundamental Analysis and Valuation Investment in StockTwits
The Covid-19 pandemic has changed several aspects of life. One of the impacts of the pandemic is the rise of retail investors in the capital market. In addition, many people are forced to be technology literate. The presence of the digital era brings the terms old economy and new economy.
The stock market
The stock market is currently dominated by retail investors who are mostly millennials, who are familiar with and close to technology. They tend to be tempted to buy technology stocks that are considered new economy. As a result, there has been an increase in stock prices related to technology, as well as digital bank shares.
When buying stocks, retail investors should be rational and return to fundamental analysis. Something without strong fundamentals will be temporary. Without long-term fundamentals, the market will punish gains in tech stocks and digital banks with sharp and deep corrections.
In conducting fundamental analysis, there are several things that need to be considered, namely the company’s past performance, the company’s prospects in the future, and stock price valuation. These three aspects are interrelated and must be the basis for an investor to buy shares on the stock exchange.
Past performance shows the strength of the company, the company’s ability to generate profits, company efficiency and company management policies. Companies that have strong past performance tend to be able to survive when economic changes occur. Companies are still able to grow and can weather storms when a crisis comes.
Future prospects talk about the company’s opportunities to maintain or even improve what has been achieved. Future prospects describe the company’s ability in the future to generate profits, increase efficiency, and maintain an optimal capital structure.
Digital Trading Company
The question is, will only digital-based companies continue to grow and develop in the future? In some sectors, technology does increase efficiency, gain customers, communicate information and excellence.
The next question is, are only new start-ups entitled to this technology? The answer is definitely no. Companies that are considered old economy certainly do not stay silent. They will invest in technology so that the market is not eaten by the startups.
So investors in the capital market should not easily believe in the plans of a company that wants to turn digital. Don’t be easily tempted to buy shares of a company that claims to be a digital company. If you are interested in trading, you can use or plan brokerage services in StockTwits
In the world of technology, there is the term winner takes all. Tech companies and digital banks in the same sector will probably only be the few remaining winners. The rest will be lost or taken over by the winner. This means that investors must be careful to make rational choices and be able to find potential winners.
Digitalization cannot be separated from the ecosystem built by the company and its affiliates. For example, in conventional banks, information about customer transactions tends to be truncated. The bank only knows the amount of funds and transaction mutations made by the customer, without knowing what the mutation is for.