Tech stocks extend losses, valuations dented
Reuters
Published Feb 08, 2016 01:29PM ET
Updated Feb 08, 2016 02:00PM ET
Tech stocks extend losses, valuations dented
(Reuters) - Technology shares with lofty valuations, including those of midcap data analytics company Tableau Software Inc and Internet giant Facebook Inc (O:FB), extended their losses on Monday following a gutting selloff in the previous session.
Shares of cloud services companies such as Splunk Inc and Salesforce.com Inc (N:CRM) had also declined sharply on Friday. They fell again on Monday, dragging down the Nasdaq Composite index 2.8 percent to its lowest in nearly 1-1/2 years.
"I think we're in an environment right now of shoot first, ask questions later. That's the mentality of technology investors right now," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
"Any disappointment is being taken out to the woodshed."
These stocks had high valuations before the selloff on Friday, driven by years of hype that spending from enterprise customers was moving to big-data analytics and cloud computing.
"I think that what we see is a crisis in valuation for the highest multiple stocks, where valuations ... had been driven too far for thematic reasons, what investors perceived as the hottest growth areas," Avondale Partners analyst Randle Reece said.
Tableau shares fell another 10 percent to $37.28. The stock lost half its market value on Friday after the company cut its 2016 revenue forecast, citing increased competition.
"Is Tableau the canary in the coal mine on IT spending or is competition muddying the waters?" RBC Capital Markets analysts asked in a research note.
If Tableau, with its lower average selling prices, was finding it difficult to sell its products to enterprise customers, it could mean trouble for companies with more expensive products, RBC said.
However, the brokerage noted that companies like Microsoft Corp (O:MSFT) and SAP SE (DE:SAPG) have reported strong demand.
Shares of Workday Inc, Teradata Corp (N:TDC) and Hortonworks Inc, which declined on Friday, were down again on Monday, as were shares of Cornerstone OnDemand Inc and Qlik Technologies Inc.
Google-owner Alphabet Inc's shares were also down on Monday. Apple Inc (O:AAPL) shares were up slightly.
Adding to the gloom, IT services provider Cognizant Technology Solutions (O:CTSH) Corp forecast its slowest revenue growth in 14 years for the current quarter as clients rein in IT spending. Cognizant's shares fell 9 percent.
LinkedIn Corp (N:LNKD) was among the few bright spots in the technology sector. The company's shares rose as much as 6.4 percent, but that was after a 43 percent drop on Friday that wiped out nearly $11 billion of its market value.
Get The News You Want
The social network for professionals shocked Wall Street on Thursday with a revenue forecast that fell far short of expectations.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.