Last night the Nasdaq Composite fell 48 points, or 1.2%, to 4,080, with a loss of 4.7% since Friday, the largest three-day loss since November 2011. Investors have been dumping highly valued, high growth technology companies on both sides of the Atlantic with a sensible correction after months of relentless gains following a period when significant in flows from hedge funds severely distorted prices.
In the UK market, online retailers AO world and ASOS fell heavily as sentiment suddenly faded after last week’s U.S. non-farm payrolls report.
AO World dropped nearly 5% yesterday, but has rebounded slightly this morning to 297p, in the last month its shares have dropped over 20% since peaking at over £4 at its IPO in late February, valuing the company at over £1.7 billion at the time and with the falls currently at £1.2 billion.
Online fashion retailer, ASOS, is currently down over 4% after a 7% fall yesterday, valuing the company at £3.6 billion, and 75 times this years expected earnings. In the last month the shares are down 34%, though up 40% for the last year.
Looking to the U.S., several companies have caught my attention recently with the extraordinary rises early in 2014. One of the key risers was electric car manufacturer, Tesla Motors, which has come off a 52 week high of $265 in February to be currently trading at $209, a drop of 21% in the last month. Despite losing $74 million on sales of $2 billion in 2013, the car company is valued at $26 billion, compared with $55 billion for General Motors which earned $5.3 billion last year.
Tesla Motors share price last 12 months
Then there’s Twitter and Facebook which had great runs but have seen their shares drop heavily in recent trading sessions. After hitting an all time high of $75 at the end of 2013, Twitter shares currently sit at $43, with a 10% drop in the last week, valuing the company at $25.3 billion.
Twitter share price last 6 months
Facebook shares have also dropped around 10% in the last week to $57, valuing the company at $145 billion. The company’s shares have dropped from an all time high of $72 in February after announcing the acquisition of WhatsApp for $19 billion on 20th February 2014. The shares dropped as low as $18 in 2012 after its initial IPO at $38 on May 18th 2012.
Do I sense a little more caution right now? These shares are off their highs but far from the sort of rout we saw in technology shares after the dot com bubble burst in 2000. Between March 11, 2000 an October 9, 2002, the Nasdaq Composite lost 78% of its value from 5,047 to 1,114. Valuations of some of the in vogue stocks still look highly stretched particularly those in the online space but nowhere near the madness of 1999-2000.
Contrarian Investor UK
IMPORTANT: The posts I make are in no way meant as investment suggestions or recommendations to any visitors to the site. They are simply my views, personal reflections and analysis on the markets. Anyone who wishes to spread bet or buy stocks should rely on their own due diligence and common sense before placing any spread trade.
by contrarianuk
Investors continue to dump tech stocks
Apr 8, 2014 at 8:53 am in Market Commentary by contrarianuk
Last night the Nasdaq Composite fell 48 points, or 1.2%, to 4,080, with a loss of 4.7% since Friday, the largest three-day loss since November 2011. Investors have been dumping highly valued, high growth technology companies on both sides of the Atlantic with a sensible correction after months of relentless gains following a period when significant in flows from hedge funds severely distorted prices.
In the UK market, online retailers AO world and ASOS fell heavily as sentiment suddenly faded after last week’s U.S. non-farm payrolls report.
AO World dropped nearly 5% yesterday, but has rebounded slightly this morning to 297p, in the last month its shares have dropped over 20% since peaking at over £4 at its IPO in late February, valuing the company at over £1.7 billion at the time and with the falls currently at £1.2 billion.
Online fashion retailer, ASOS, is currently down over 4% after a 7% fall yesterday, valuing the company at £3.6 billion, and 75 times this years expected earnings. In the last month the shares are down 34%, though up 40% for the last year.
Looking to the U.S., several companies have caught my attention recently with the extraordinary rises early in 2014. One of the key risers was electric car manufacturer, Tesla Motors, which has come off a 52 week high of $265 in February to be currently trading at $209, a drop of 21% in the last month. Despite losing $74 million on sales of $2 billion in 2013, the car company is valued at $26 billion, compared with $55 billion for General Motors which earned $5.3 billion last year.
Then there’s Twitter and Facebook which had great runs but have seen their shares drop heavily in recent trading sessions. After hitting an all time high of $75 at the end of 2013, Twitter shares currently sit at $43, with a 10% drop in the last week, valuing the company at $25.3 billion.
Facebook shares have also dropped around 10% in the last week to $57, valuing the company at $145 billion. The company’s shares have dropped from an all time high of $72 in February after announcing the acquisition of WhatsApp for $19 billion on 20th February 2014. The shares dropped as low as $18 in 2012 after its initial IPO at $38 on May 18th 2012.
Do I sense a little more caution right now? These shares are off their highs but far from the sort of rout we saw in technology shares after the dot com bubble burst in 2000. Between March 11, 2000 an October 9, 2002, the Nasdaq Composite lost 78% of its value from 5,047 to 1,114. Valuations of some of the in vogue stocks still look highly stretched particularly those in the online space but nowhere near the madness of 1999-2000.
Contrarian Investor UK
IMPORTANT: The posts I make are in no way meant as investment suggestions or recommendations to any visitors to the site. They are simply my views, personal reflections and analysis on the markets. Anyone who wishes to spread bet or buy stocks should rely on their own due diligence and common sense before placing any spread trade.