Slump raises questions over tech IPO valuations
Shares in major tech firms dip, but are more losses to come?
Financial analysts have aired fears that technology company valuations are overblown after US tech stocks tumbled 4% on Friday, losing $140 billion.
They continued to make losses on Monday despite recovering slightly at the end of the day, with Apple falling from $155.10 on Friday to $145.42 yesterday, and Amazon dropping from $1,012.99 on Friday but had lowered to $948.41 yesterday.
Netflix shares have fallen more than 4%, Google by 0.86%, Facebook by 0.78% and Microsoft by 0.77%, leading analysts to ask whether tech firms are overvalued, and whether the stock falls represent a pause in investment or whether they foreshadow more losses in the market.
Senior market analyst at ETX Capital Neil Wilson said in a report by The Telegraph: "The big US tech stocks have gone stratospheric this year and investors are querying if there is anything left in the tank."
"At the moment it looks like it's just a pause that allows for some profit taking before another push higher. But it certainly has the potential to rattle markets if it continues," he explained.
Apple's stock price hit a record high in February of $136.68 thanks to excitement surrounding the next iPhone model, but other technology giants have suffered on the stock market. Following Snap's IPO March debut that saw it valued at $30 billion on the first day of trading, it has since plummeted, with shares losing plenty of their value from a $27.09 peak in March to today's $18.20 valuation.
A study released at the start of 2017 found that one-third of tech IPOs within the last decade are now trading below their initial valuations.