It's been a fairly awful couple of days for the S&P/ASX 200 Index (ASX: XO). Since Friday's close, the ASX 200 has now retreated by a chunky 1.01%, including the 0.35% the index has shed so far today. But that loss is nothing compared to the carnage that the Weebit Nano Ltd (ASX: WBT) share price has experienced.
Last Friday, Weebit Nano shares closed at $4.23 each. But today, those same shares are asking just $3.55.
Yep, Weebit Nano shares have lost 16.3% in just one-and-a-half trading days. That includes the horrid 9.46% the company shed yesterday, as well as the 7.6% Weebit shares have lost today thus far (at the time of writing).
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Weebit's ASX 200 parade gets some rain
This is certainly an unfortunate development for this ASX tech share. It was supposed to be a week to remember for Weebit Nano, which just hit a major ASX milestone by officially joining the ASX 200 index just yesterday for the first time.
When a share joins the ASX 200, it is not uncommon to see its share price appreciate, sometimes meaningfully. That's because any ASX 200 index fund (of which there are many) must now own Weebit Nano shares in its portfolio. Further, Weebit Nano's ASX 200 inclusion also opens the door to the company for any ASX fund manager that is restricted to the ASX 200 universe.
As such, it's quite surprising to see Weebit Nano's share price having such a shocking week thus far. So what might be going on here?
Well, it's hard to say, unfortunately. The recent share price drops we have seen with Weebit Nano come despite no major news or announcements from the company at all over the past fortnight.
There could be some other factors at least though.
Why has the Weebit Nano share price crashed after joining the ASX 200?
Firstly, let's talk about other tech stocks. The past one-and-a-half trading days have been particularly brutal for ASX tech shares. Since last Friday, the S&P/ASX 200 Information Technology Index (ASX: XIJ) has shed a nasty 2.9%. That's more than double the losses of the broader ASX 200.
Sure, Weebit Nano's losses are still large compared to other ASX tech shares. But we've seen the likes of Xero Limited (ASX: XRO) and Block Inc (ASX: SQ2) lose 4% and 6% respectively over the week so far. So it's not just Weebit Nano.
ASX tech shares have followed the lead of the US markets in this respect. Since Thursday over in the US, the tech-heavy NASDAQ-100 Index (NASDAQ: NDX) has lost a hefty 1.6%.
So it's possible that the Weebit Nano share price has just been caught up in all of this technology-related pessimism.
But there's another potential explanation for the Weebit Nano share price's woes.
As my Fool colleague James noted just yesterday, Weebit Nano's inclusion in the ASX 200 index "makes it easier for institutional investors to short Weebit Nano".
Weebit Nano arguably has many of the attributes short sellers often look out for. First among these might be the fact that Weebit Nano has a large market capitalisation with not much in the way of profits to show for it. So perhaps short sellers are taking this opportunity to open up positions in Weebit Nano shares.
Whatever the reason, it has certainly not been the ASX 200 welcome party this week that Weebit Nano might have hoped for.
The Weebit Nano share price is still up 2% in 2023 to date. However, the company has now lost more than 50% since its last 52-week high of $9.03:
