ASX All Ords tech shares have been sold off significantly in 2022, but could this mean there are bargains waiting to be snapped up?
There are definitely some cheap shares out there, according to Elston Asset Management portfolio manager Justin Woerner.
Speaking to Livewire, Woerner singled out a number of cheap ASX All Ords tech shares that have slumped by more than 80% this year to date.
He did not suggest whether or not these specific companies are good opportunities. However, he believes the sell-off in tech shares has much more to do with changing investor risk appetites and interest rate hikes than negative adjustments to their fundamentals.
Woerner said:
Technology businesses tend to be less mature and rely on long-term revenue growth to justify valuations. Higher interest rates have worked to discount valuations. So, most of the price damage has been due to contracting PE (price-to-earnings) ratios rather than weakening earnings.
If you're willing to look through the short-term volatility, we see long-term value for several of the higher-quality technology businesses.
Here are the three ASX All Ords tech shares mentioned by Woerner as the biggest fallers this year. However, he urged caution when it comes to investing in the tech sector, saying companies need to be assessed on their individual merits.
EML Payments Ltd (ASX: EML)
The EML Payments share price is down by 81% year to date. It ended Friday's session at 63 cents.
The payment solutions platform was ousted from the ASX 200 in September due to not keeping up with the pack in terms of market capitalisation. Other bad news included being one of the most shorted ASX shares on 12 September.
However, some positive news emerged in August when the company announced its full-year results for FY22. EML Payments shares leapt 11% amid its earnings card hitting the market.
The company posted record revenue of $234.41 million, as well as a group underlying net profit after tax (NPAT) of $32.1 million. A $20 million share buyback program was also announced.
Redbubble Ltd (ASX: RBL)
The Redbubble share price is down 85% so far this year, closing on Friday at 50 cents.
The e-commerce company for artists has been having a rough ride in the recent past, including crashing 26% when it announced its first-quarter update on 20 October.
Red Bubble's earnings before interest and tax (EBIT) turned sharply negative during the quarter, ending with a $17 million loss. To put this into perspective, in the previous quarter this ASX All Ords share reported a $0.9 million profit.
It also inflated its expenses during the quarter, including a $3.8 million brand investment, and increased staff salaries and wages by $4.7 million.
Disappointing results were also recorded for FY22, as its earnings before interest, taxes, depreciation and amortisation (EBITDA) nose-dived 121.25% year over year to $11.2 million.
Dubber Corp Ltd (ASX: DUB)
The Dubber Corp share price is down 88% year to date to 32 cents.
Although the cloud-based call recording company's shares have been on a downward slide since late last year, shares slipped a massive 35% on 10 October due to its accounts being audited and then posted to the market.
The audit showed that its revenues were $10.3 million lower than its unaudited results described. Not only were its revenues lower, but its costs had also been significantly underestimated, too. Its total current loss stands at $83.2 million, compared with the previous unaudited figure of $64.7 million.
In a separate release to the market that day, the ASX All Ords share announced it was relieving its CFO Peter Curigliano of his duties with immediate effect.
On Tuesday, the company released its latest quarterly activities report. It reported cash receipts in the September quarter of $9.5 million, up 42% quarter-on-quarter. Operating cash costs increased by $500,000 to $20 million, while revenue was $6.6 million — down 3% quarter-on-quarter and up 10% year-on-year. Cash on hand at 30 September was $73.8 million.
The Dubber share price fell 8.6% on the day of the release.
