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Altium Limited (ASX:ALU) share price falls almost 10%

The Altium Limited (ASX: ALU) share price has fallen nearly 10% in a very painful day for the electronic PCB software business.

If you want to point the finger somewhere then you can look no further than the US share market.

The S&P 500 fell 1.66% earlier today. The NASDAQ dropped a painful 3.26% but it was the largest individual constituents that felt the most pain.

Apple fell nearly 4%, Amazon dropped 5%, Microsoft declined 3.4%, Facebook declined 5.7%, Alphabet (Google) went down 3.8% and Netflix dropped 5.5%.

Altium is often seen as a proxy on the ASX for the FAANG shares. Its ASX tech peers didn’t fare so well today either with Afterpay Touch Group Ltd (ASX: APT) dropping another 4.8%, Xero Limited (ASX: XRO) fell 5.4%, Appen Ltd (ASX: APX) declined 2.2% today and WiseTech Global Ltd (ASX: WTC) went down 1.8%.

Of course, none of the businesses that I’ve mentioned in this article have seen their underlying intrinsic value fall by 5% or more today. It’s just investors selling for a price they can get. Indeed, it’s days like today that show how liquid the share market is – it takes more than a day to sell an investment property that’s for sure.

Some conservative investors think this decline in value of shares like Altium has been coming for a while. Whilst I’d agree with the thought that ASX tech sector got too frothy after reporting season a few months ago, the current valuations are looking more attractive.

Foolish takeaway

Even after today’s fall Altium is still trading at 41x FY19’s estimated earnings. So I’m not quite jumping in yet – if it fell below $20 then I’d be interested.

Altium has growing profit margins, quality clients, high recurring revenue and a growing dividend stream. There’s a lot to like about this technology-focused business for long-term growth.

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Motley Fool contributor Tristan Harrison owns shares of Altium. The Motley Fool Australia owns shares of AFTERPAY T FPO, Altium, Appen Ltd, WiseTech Global, and Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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