Hit hard: Why have ASX tech shares copped a battering today?

Why are tech investors the losers this Thursday?

| More on:
A man smashes light bulbs with a huge hammer.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The S&P/ASX 200 Index (ASX: XJO) stayed well in the green for another positive session this Thursday. At the end of the trading day, the ASX 200 barrelled through with a healthy gain of 0.28% under its belt. But the same could not be said of ASX tech shares.

ASX tech shares were by far the worst-performing sector players of the day. At the close of trade, the S&P/ASX 200 Information Technology Index (ASX: XIJ) had lost a horrid 4.8% of its value.

We saw this broad move play out in many individual tech shares as well.

Take Xero Limited (ASX: XRO). It was the worst-performing ASX 200 share on the market today, closing a depressing 13.2% lower at $99.50.

That's as bad as it gets. But we saw some pretty awful moves elsewhere. The Weebit Nano Ltd (ASX: WBT) share price lost 2.27% to close at $4.31 a share. Life360 Inc (ASX: 360) shares were down around 1.8% at the close, while WiseTech Global Ltd (ASX: WTC) lost 2.37%.

So what on earth was going on with the ASX tech space this Thursday?

Why were ASX tech shares punished so severely this Thursday?

Well, it seems most tech shares took their lead from the Xero share price.

Xero's fortunes today were markedly worse than most other tech stocks, as mentioned above. That's because the cloud-based accounting software provider reported its latest earnings covering the half year to 30 September. And investors evidently did not like what they saw.

As we went through earlier, Xero revealed a 21% year-on-year rise in revenues to $800 million, as well as a net profit after tax (NPAT) of $54 million, which was a nice turnaround from the net loss of $16 million over the same period last year.

Subscriber numbers were also up by 13% year-on-year to 3.95 million.

But investors were clearly expecting more. As my Fool colleague Bernd reported:

Expectations were high for the tech stock, following on a year of rocketing share price gains and promises from newly appointed CEO Sukhinder Singh Cassidy to make the company profitable and not pursue growth at any cost.

Tech investors are often a little more jittery than others. So it's not too surprising to see such a savage reaction to a disappointing earnings report from a company that still remains up a whopping 41.1% over 2023 to date (that's even after today's falls).

Perhaps ASX tech stocks will have a better day tomorrow. But we'll have to wait and see what happens.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Technology Shares

A man in his 30s with a clipped beard sits at his laptop on a desk with one finger to the side of his face and his chin resting on his thumb as he looks concerned while staring at his computer screen.
Technology Shares

Can BrainChip shares reach 30 cents by Christmas?

I'd be shocked if BrainChip got anywhere close to 30 cents...

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Technology Shares

Could the Altium share price hit $50 in 2024?

This stock still has plenty of growth potential.

Read more »

Happy man and woman looking at the share price on a tablet.
Technology Shares

Bell Potter names the best ASX tech shares to buy

There's a lot to like about these tech shares according to the broker.

Read more »

Five happy friends on their phones.
Technology Shares

Analysts say these ASX tech shares are buys in December

Here's why these three shares have been named as buys.

Read more »

Happy woman and man looking at an iPad.
Technology Shares

2 ASX tech stocks you'll be glad you bought when the bull market starts

I reckon grab these technology shares now and watch the rising tide take them to the top.

Read more »

A man and a woman sit in front of a laptop looking fascinated and captivated.
Technology Shares

The CEO of this ASX 200 stock just sold $6 million in shares

It's never pleasant to see a CEO offload $6 million in stock...

Read more »

A man holds up a block from falling in a row of dominos.
Share Market News

Here's how the ASX 200 market sectors stacked up this week

The ASX 200 gained 0.36% and the technology sector stood out.

Read more »

A woman holds her hand out under a graphic hologram image of a human brain with brightly lit segments and section points.
Technology Shares

Up 40%: What on earth happened to BrainChip shares in November?

How did Brainchip shares pull off such an incredible November?

Read more »