Tech stocks have been taking a battering lately. GBO (Globo) has lost half its value from its 52w high. ASC (ASOS) has lost 29%, KMK (Kromek) has lost 54% from its high, and NANO 44%.
GBO has had its auditor resign, KMK has admitted sales are delayed (although many are suggesting that they wont actually materialise), and NANO looks like its commercialisation will take longer than expected.
Most of these companies are at valuations far higher than can be justified by fundamentals. It’s not just a case that some of the valuation froth is being knocked off the top. Valuations are still astronomical, and fundamentals are deteriorating. We’re also seeing a lot of tech nonsense being floated on the market.
None of this can help the broader tech sector in general, and I think its highly likely that their ratings will come down over the course of the year. They virtually have to. Investors are getting burnt, and this can only serve to bring Risk to the forefront; and valuations down.
Of course, I can’t be sure that there wont be a sharp recovery with investor confidence returning. It seems like an awfully risky way to bet, though.