Why Investors Are Selling Off Tech Stocks And What's Next - CNA

SINGAPORE: Amid an uncertain environment and concerns about their profitability, shares of once buzzy technology firms have been in freefall this year, with some plummeting as much as 70 per cent.

Tech stocks that benefited from the COVID-19 pandemic have suffered especially, such as streaming service Netflix, which has seen its share price plunge around 60 per cent since January.

Canadian e-commerce firm Shopify, which received a fillip from the pandemic-induced online shopping boom over the past two years, has seen its shares fall around 70 per cent year to date.

Singapore-headquartered tech groups have not been spared from the rout.

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Shares of Grab, which made a much-anticipated debut on the Nasdaq stock exchange in December 2021, last traded at US$3.73 on Monday (Aug 15). This marked a nearly 48 per cent decline since January and a loss of almost three-quarters in value since its listing.

Sea, which owns mobile gaming company Garena and online shopping platform Shopee, has also seen its shares on the New York Stock Exchange fall by about 61 per cent this year.

Several of these industry disruptors have since announced layoffs. Shopify said last month that it will axe about 1,000 workers, or 10 per cent of its global workforce, while Sea’s Shopee retrenched an undisclosed number of employees across several markets in June.

The layoffs come as tech firms are “consolidating” ahead of a possible recession and as liquidity dries up amid rising interest rates, CNA previously reported.

Moving forward, with the global economic outlook and company fundamentals still far from certain, experts said investors who are looking to jump into beaten-down tech stocks should remain cautious.