This past week we have seen a number of top technology companies getting slammed on the ASX. In part, this has been attributed to sky-high valuations that left share prices highly susceptible to any negative press.
Compared to their WAAAX constituents, WiseTech Global Ltd (ASX: WTC) and Afterpay Touch Group Ltd (ASX: APT) have taken huge hits to their market capitalisation, but all WAAAX share prices are have stooped lower over the past few days.
Here’s a closer look at what’s been happening in the tech space this past week.
The WiseTech share price has plummeted 16.85% lower in the last five days to $27.63 at time of writing.
The company returned from its trading halt on Monday as it sought to respond to allegations by J Capital (JCAP). JCAP claimed that WiseTech was overstating its performance in the European market, as well as its profits and growth numbers.
However, the company released a statement this morning rejecting the claims made by JCAP. It was noted that JCAP had published the report without prior knowledge of WiseTech and would make significant gains from this move. Founder and CEO Richard White also reaffirmed the FY20 guidance, confirming that EBITDA would fall between $145–$153 million with growth of 34%-42%.
The stock price has jumped more than 5% in trading this morning.
Afterpay Touch Group Ltd (ASX: APT) has seen its market capitalisation downsize 13% in the last 5 days, falling to $29.52 at time of writing.
Weakness in its share price is a result of UBS plastering sell recommendations on both Afterpay and its competitor Zip Co Ltd (ASX: Z1P). This is due to increasing regulatory concerns, with a report released by the Reserve Bank of Australia that the buy-now pay-later sector will be under review next year.
However, Afterpay responded saying it isn’t subject for inquiry unless for a broad-based periodic review for payments. The company released a statement, claiming that its business model is contrary to traditional credit models. Customers receive free service that supports responsible spending, while also providing merchants with a marketing channel to millennials and Gen Zs.
Similarly, Appen Limited (ASX: APX) is down 9% in the last five days to $21.52 at time of writing.
Though no company-specific news has been released recently, this weakness is a result of a broader decrease in the tech/IT sector.
This is a whopping 30% discount to Appen’s July stock price, which is when shares passed the $30 mark. Ultimately, this could be a bargain given the company’s compelling proposition. Appen’s remote labour force continues to provide quality data sets for AI and machine-learning applications in big tech.
Altium Limited (ASX: ALU) has seen its share price sink 6% lower in the previous five days to $32.42 currently.
Similar to Appen, no new announcements have been released. However, I would argue that Altium holds a strong balance sheet and future expectations of growth. It operates debt-free with almost a 40% profit margin. It similarly grew its bottom line by 41% in FY19.
This is one to watch, as it is currently trading on a 15% discount from its peak in mid-September.
In the last five days, the Xero Limited (ASX: XRO) share price has softened by 7% to $65.51 currently.
Xero recently announced a new client, RSM Australia, which is the company’s single biggest migration to its platform. This is on top of its success in penetrating the South African and Canadian markets via partnerships.
However, the recent weakness in its share price seems to be a result of a wider market sell-off within the tech space.