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Ask HN: Why is the market favouring companies with FCF?

2 points by axg11 ↗ HN
Every company in tech is getting hammered in the stock market. I keep hearing that companies with high free cash flow are being favoured and the market is punishing companies that are poorly optimised for FCF.

Why has this sudden shift happened? Hasn’t it been obvious that interest rates will rise eventually?

Looking for some insight and plausible explanations. Predicting and understanding market behaviour can be like reading tea leaves but I still think there’s some value/signal in discussions.

3 comments

[ 3.4 ms ] story [ 22.6 ms ] thread
streetcat1
No more FED put ?

2016, QQQ = 100

2020 QQQ = 400

Why?

It actually very easy to understand the market behavior, just look at the charts.

And, you should decouple the company from the stock. A good company can have bad stock , what count for the stock market is what is priced in, not the actual performance.

axg11
I get that - but why was this not priced in? Interest rate rises and tapering of QE has been on the cards for a while. The economic impact of COVID is inevitably transient. Why has this suddenly dawned on the market?
streetcat1
I think that the market looks for the next fed put level.

I.e at what point the administration tell the FED that enough is enough. Until this happens it would just go down.