ASX tech shares have been smashed today as market hits 3-week low

Why are ASX tech shares in the firing line today? Let's take a closer look.

Sebastian Bowen

Author Bio

Sebastian Bowen has been a Motley Fool contributor since late 2018. Sebastian found his passion for writing and educating others about shares and all things finance after completing his studies in political, economic, and social science, and he enjoys bringing this passion to life at the Fool. His investment philosophy is simple – buying high-quality companies at sensible prices. When he’s not researching his next investment at all hours of the morning, Sebastian enjoys classic movies and unwinds with a good book, newspaper, or record.

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Bachelor of Political, Economic, and Social Sciences (Government and International Relations), University of Sydney

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"In the short run, the market is a voting machine, but in the long run, it is a weighing machine."
– Benjamin Graham

Published February 24, 2022 1:02 pm AEDT

As most ASX investors would be aware of by now, the S&P/ASX 200 Index (ASX: XJO) is currently enduring a pretty nasty sell-off so far this Thursday. At the time of writing, the ASX 200 has lost a sobering 2.94%, putting it at a 3-week low. But it's ASX tech shares that have arguably taken the brunt of the fear that has entered the market.

ASX 200 mining, energy, and materials shares are also in the firing line. But the S&P/ASX 200 Information Technology Index (ASX: XIJ) is leading the ASX 200's losses, with the index down almost 5%.

So let's dig a little deeper and see which ASX tech shares are getting the royal treatment from investors.

A businessman smashes his laptop with a hammer because it is on fire. — Image source: Getty Images

Tech shares take the brunt of ASX 200's losses

ASX buy now, pay later (BNPL) leader Zip Co Ltd (ASX: Z1P) is currently down 8.6%. The new owner of Zip's old rival Afterpay, Block Inc (ASX: SQ2), is faring even worse. Its shares are down 10.3% at $19.52. Block is now down more than 32% since its ASX debut only last month.

Life360 Inc (ASX: 360) reported its earnings this morning. Investors have clearly been spooked by what they saw as the company is down a devastating 30% at $4.60 a share.

Likewise with Appen Ltd (ASX: APX). Appen also reported this morning, and investors have arguably given its report card another decisive 'F', seeing as this company is down 25.7% at $6.36 a share. Appen hasn't seen that kind of share price since at least 2017. Ouch.

Even beloved ASX 200 tech shares WiseTech Global Ltd (ASX: WTC) and Xero Limited (ASX: XRO) haven't escaped the onslaught. Both are down 5.5%.

You get the idea.

So why are ASX tech shares getting such a hammering from investors today? Well, in many cases, it appears to be a combination of the broader market sell-off together with poorly received earnings. But due to their 'growth' nature, ASX tech shares are often the companies that are hardest hit in times of market turmoil and fear.

This is due to a number of potential reasons, including the higher valuations investors often allow these companies, together with their perceived longer growth runways.

But no doubt that will be of cold comfort to many ASX tech investors today. Such is the way of ASX life sometimes.

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