The £51bn tech stock sell-off
Second day of panic hits globe’s digital giants
a GLOBaL sell-off of tech company stocks wiped more than £51bn from their value yesterday.
in another day of tumbling shares, Britain’s biggest digital firms and silicon Valley giants remained under pressure on fears they are overvalued.
Those hardest hit included apple, Facebook, Microsoft, netflix, amazon and Google’s parent company, alphabet.
at one point, snap – the parent company of mobile phone app snapchat and a target of short-sellers – fell as low as $17.60, just a few cents above its original float price.
in the UK, £218.2m was wiped off software firm Micro Focus. On the continent, apple chip maker Dialog semiconductor saw £191.7m knocked off.
The rout started in Wall street on Friday night when the nasdaq index dropped by 2.4pc, which spread to Europe and asia on Monday. it followed a warning issued by Goldman sachs which told investors that betting on the continued expansion of tech giants was ‘increasingly risky’.
Fears have been building that many tech stocks seem overvalued compared to the amount of sales they bring in.
Fergus shaw, fund manager at Cerno Capital, said: ‘This is the nature of the tech sector. Valuations do from time to time become very stretched and they come back, and anyone who has paid a very high valuation might experience some short-term pain.’
investors have rushed to buy stocks in tech companies which are seen as safe harbours of rapid growth, as hopes of an economic stimulus plan from Us President Donald Trump have faded.
On Friday, apple shares suffered their worst drop in 14 months amid reports it was using slower modems in its new iPhone models when compared with those in rivals. They continued to slide in value on Monday, wiping £19.4bn off its value.
Meanwhile, shares in video streaming service netflix fell by more than 4pc and took £2.4bn off its worth. The turmoil drove the nasdaq down to its lowest point in three weeks.
neil Wilson of ETX Capital said: ‘it’s all come off the back of the Goldman sachs report. That spooked investors.’
amid the gloomy figures, some analysts were sceptical the sudden downturn would last. Chris Beauchamp, chief market analyst at iG, said: ‘Having been such a one-way bet so far this year, this sudden turn will have caught out more than a few over-eager latecomers. However, there will be plenty of dip buyers out there who have been waiting for a pullback of this size.’