What happened to Motorola stock?

Barometer Capital Management CEO and CIO David Burrows says the pullback in Motorola Solutions (Motorola Stock Quote, Chart, News, Analysts, Financials NYSE:MSI) reflects the broader pressure facing high-multiple growth stocks as long-term interest rates remain elevated.

Speaking on BNN Bloomberg’s Market Call on Nov. 20, he revisited Motorola, a top pick from a year earlier, then trading at $469.13 and now at $368.99, a decline of about 20%.

Burrows said his original call was based on Motorola’s positioning in digital evidence and incident-management technology.

“There are two companies that sell gear into police departments for cameras, on-body cameras, and recording incidents and then generating AI summaries and reporting,” he said. “So it’s a productivity tool. That’s what Motorola is today.”

He said that both Motorola and Axon enjoyed strong runs but ultimately hit headwinds that have affected growth stocks more broadly.

The key challenge, he said, is the impact of higher long-term rates on valuation.

“If you own a high-multiple growth stock and long-term rates stay higher than people expect, then when you discount the future cash flows back to the present, you have to use a higher discount rate,” he said. “That’s caused a difficulty for a lot of growth stocks, which is why really mid-cap and small-cap growth are having a hard time.”

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