How are the ASX WAAAX shares performing in 2021?

What’s been happening for these once unrivalled market darlings?

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In the days before COVID-19, much of the Australian financial news headlines centred around the WAAAX group of companies. This collection of tech market darlings, consisting of WiseTech Global Ltd (ASX: WTC), Afterpay Ltd (ASX: APT), Appen Ltd (ASX: APX), Altium Limited (ASX: ALU) and Xero Limited (ASX: XRO), was the antipodean version of the NASDAQ’s FAANG stocks.

FAANG shares comprise global tech giants Facebook, Inc. (NASDAQ: FB), Amazon.com, Inc. (NASDAQ: AMZN), Apple Inc (NASDAQ: AAPL), Netflix Inc (NASDAQ: NFLX) and Google’s parent company, Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL).

But the social and economic impacts of COVID-19 fundamentally changed the market. Last year, it was a new generation of tech shares that took up most of the headlines. High growth companies like Whispir Ltd (ASX: WSP), Megaport Ltd (ASX: MP1) and Bigtincan Holdings Ltd (ASX: BTH) arguably knocked the WAAAX stocks off the top of many retail investors’ most-wanted lists.

So, does the old guard still have the staying power to outlast the new kids on the block, or are the WAAAX stocks now just another legacy of the pre-COVID market? Now seems like a good time to revisit these five ASX tech shares to see how they are faring more than a year into this global pandemic.

WiseTech

The share price of logistics software company WiseTech struggled early on last year as international trade levels slumped during COVID. However, a surprisingly strong FY20 result – in which the company reported year-on-year revenue growth of 23% – lit a fire under the WiseTech share price. The late surge meant that WiseTech shares ended the year up by over 30%.

The WiseTech share price hasn’t performed as well this year, however, losing almost 10% of its value. This came after the company’s revenue growth slowed slightly over the first half of FY21, only increasing by 16% versus the first half of FY20.

Afterpay

The share price of buy now, pay later (BNPL) giant Afterpay skyrocketed in 2020. After falling below $9 during the market crash in March, Afterpay shares ended the year valued at a scarcely believable $118 – a gain of well over 1,200%!

That trend continued into 2021, with this ASX tech share climbing to a record high of $160.05 by mid-February. Since then, Afterpay shares have suffered a significant correction, dropping over 40% to $93.93 as at the time of writing. This share price decline has come despite the fact that Afterpay reported a 108% jump in income for the first half of FY21 (versus the first half of FY20).     

Altium

Altium develops software that helps engineers design printed circuit boards for use in electronics equipment. Despite a brief rally in the wake of the March market crash, Altium shares underperformed last year and ended up declining by around 2%.  

The share price has continued this decline in 2021, dropping by around 17% since the start of the year. This has come on the back of Altium’s disappointing first half FY21 results, in which the company reported its first drop in revenues in eight years.

Appen

Artificial intelligence company Appen has been in the wars recently. After surging to a new all-time high price of $43.66 in August, Appen shares have sunk all the way back to just $13.43 as the time of writing.

The share price decline came as Appen reported underwhelming results for the year ended 31 December 2020. The company’s initial guidance suggested earnings before interest, tax, depreciation and amortisation expenses (EBITDA) would be in the range of $125 million to $130 million, but this was subsequently downgraded to between $106 million and $109 million. Reported EBITDA eventually came in at $108.6 million for the year.

Xero

The Xero share price got a significant boost last year as the company’s accounting software helped many small to medium-sized businesses meet their tax obligations under the Federal Government’s JobKeeper program. Its share price ended the year up by over 80%.

The Xero share price has been much more volatile so far this year. Overall, Xero shares are currently down by around 11% year to date. Xero’s underlying business momentum has remained strong, however, with revenues for the full year ended 31 March 2021 up 18% to NZ$848.8 million. Xero also delivered record growth in customer numbers over the second half of FY21, picking up a net total of 288,000 subscribers.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Rhys Brock owns shares of AFTERPAY T FPO, Altium, Appen Ltd, BIGTINCAN FPO, MEGAPORT FPO, Whispir Ltd, and WiseTech Global. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Altium, Amazon, Apple, BIGTINCAN FPO, Facebook, MEGAPORT FPO, Netflix, and Whispir Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Appen Ltd and Xero and recommends the following options: long January 2022 $1920 calls on Amazon, short March 2023 $130 calls on Apple, short January 2022 $1940 calls on Amazon, and long March 2023 $120 calls on Apple. The Motley Fool Australia owns shares of AFTERPAY T FPO and WiseTech Global. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, BIGTINCAN FPO, Facebook, MEGAPORT FPO, Netflix, 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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