Many ASX tech companies became market darlings during COVID-19. While broad sectors of the economy suffered under lockdowns, tech companies found themselves in high demand. Technology kept us connected and entertained while we isolated in our homes. Additionally, it helped companies support workforces transitioning to remote working setups.
But as many countries begin to see the beginnings of an end to the pandemic, investors are struggling to work out how these companies will all fare once life returns to something closer to “normal”. Spurred on by recent falls on the NASDAQ, many of the tech stocks that surged to new highs just a few months ago have now lost significant chunks of their market caps.
Here are four top-performing tech companies from 2020 that have seen their share prices plunge recently.
Megaport Ltd (ASX:MP1)
Megaport had a rollicking 2020. Its shares were sold off heavily during the March crash. Shares dropped to well below $7, before skyrocketing to an all-time high price of $17.67 by late August. However, since then, the company’s shares have dropped off considerably. They are now valued at just $11.72 – a fall of over 30%.
The company, which specialises in cloud-based networking technology, saw demand surge during COVID. Highlights from the company’s first-half included an 11% half-on-half increase in annualised revenue (to $75 million). In addition, there was an 11% increase in total customer numbers.
Damstra Holdings Ltd (ASX:DTC)
Damtra uses technology to deliver workplace management solutions to companies operating in specialised industries like mining and construction. Its share price skyrocketed 321% from a low of $0.58 last March all the way up to $2.44 by October. But it too has sunk lower recently, down more than 50% to $1.14.
A part of the Damstra decline could be attributable to share price dilution after it acquired workplace technology company Vault Intelligence Limited (ASX:VLT). As part of the takeover deal, Damstra issued 45 million new shares to Vault’s existing shareholders.
Bigtincan Holdings Ltd (ASX:BTH)
Bigtincan develops sales enablement software. Its shares also zoomed higher during COVID-19 lockdowns. As recently as October, they were trading at an all-time high of $1.60. However, the share price has now plunged more than 40% to $0.94.
Bigtincan is still a young company, but its first-half FY21 results were still encouraging. Annualised recurring revenues increased by 50% over first half FY20 to a record $48.4 million. The company also completed two strategic acquisitions during the half.
Whispir Ltd (ASX:WSP)
Whispir is a cloud-based software company that helps companies manage their communications workflows. The company has developed a centralised platform that helps customers create high-quality, customisable templates for email, web, and social media communications.
Managing communications with customers and staff was a key priority for many businesses during lockdowns. Consequently, Whispir’s share price soared. The share price rose from under $1 in the March crash all the way to a high of $5.24 by late last year. But it has now slipped more than 30% to $3.38 at the time of writing.
First-half FY21 results were reasonably strong, with annualised recurring revenues up 29% versus the first-half FY20 to $47.4 million, and a record 77 new customers onboarded during the half.
After surging to new highs last year, these ASX tech shares are all now firmly in correction territory. There could still be more volatility on the horizon for these companies, as the market continues to try to work out what the economy will look like in the months and years after the COVID-19 pandemic.
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Rhys Brock owns shares of BIGTINCAN FPO, MEGAPORT FPO, Whispir Ltd and Damstra Holdings Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends BIGTINCAN FPO, Damstra Holdings Ltd, MEGAPORT FPO, and Whispir Ltd. The Motley Fool Australia has recommended BIGTINCAN FPO, Damstra Holdings Ltd, MEGAPORT FPO, and Whispir Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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