Xero hit for six in mad week
A week of market mayhem has wiped nearly $1 billion off the value of NZX-listed software stocks.
Cloud accounting company Xero took the brunt of the punishment with $823 million knocked off the company's market capitalisation, while Diligent got off largely unscathed.
Xero, which in November rose to become the NZX's second-most valuable stock, has now drifted down to sixth place, behind Fletcher Building, Auckland International Airport, Telecom, Ryman and Sky Television.
The drop will in some investors' views have only restored some sanity to the market and the vast majority of Xero's shareholders are still greatly up on their investment, but it will mean others are sitting on substantial losses.
The stock ended the week 17 per cent down, 32 per cent or $1.8b off its all-time high.
Xero has not been the only Kiwi technology stock to be buffeted this week.
Recent listing Wynyard Group fell 16 per cent and is 30 per cent off its record high.
Fellow newbie SLI Systems shed 14 per cent and is 34 per cent off its high.
The NZX's broader SciTech index is 17 per cent off the record it achieved on January 22.
Forsyth Barr analyst Blair Galpin said the weakness was a reflection of what was happening on the United States market.
The Nasdaq index had this week experienced its biggest drop since 2011 and high-growth stocks had taken the bulk of the punishment, he said.
Galpin said the broker viewed it as a "correction" rather than a bubble that had burst, though the volatility could continue.
He doubted it would impact the flow of new technology stocks that were considering Initial Public Offerings on the NZX.
Most would have their own reasons for listing which would not go away and even the likes of SLI and Wynyard were still well up on their offer prices, he said.
- The Dominion Post
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