fbpx

QQQ
+ 0.35
372.63
+ 0.09%
BTC/USD
+ 437.24
43247.81
+ 1.02%
DIA
+ 0.36
347.20
+ 0.1%
SPY
+ 0.78
442.40
+ 0.18%
TLT
-1.45
149.81
-0.98%
GLD
-0.19
163.70
-0.12%

Analysts React To Heavy Selling Pressure In The Tech Sector

September 9, 2019 3:01 pm
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More
Analysts React To Heavy Selling Pressure In The Tech Sector

Tech stocks led the market lower on Monday, with the Technology Select Sector SPDR Fund (NYSE:XLK) trading down 1% on the day. Twilio Inc (NYSE:TWLO) shares plunged 9.7%, Roku Inc (NASDAQ:ROKU) shares dropped 4.4% and Snap Inc (NYSE:SNAP) shares tumbled 7.1% amid the sell-off.

Fearful Investors

Canaccord Genuity analyst Richard Davis said fears about the macro environment are driving the “risk-off” trade on Monday.

“Recession fears and general concern that government agencies have decided to punish tech companies – see news on Google today,” Davis told Benzinga.

The Wall Street Journal reported on Sunday that Alphabet, Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) and Facebook, Inc. (NASDAQ:FB) are the subject of two new formal antitrust probes by bipartisan coalitions of state attorneys general.

Twilio Hammered

Several analysts told Benzinga the most likely explanation for the weakness is simply investors taking profits on high-growth stocks and rotating into more value-oriented names.

“I suspect it’s a rotation out of high multiple/high beta into more cyclical stocks,” William Blair analyst Bhavan Suri told Benzinga. He said this rotation is the most likely explanation for weakness in Twilio and other software names.

“Also many companies that reported in the saas / software space had good but not stellar results – so I suspect investors worried about sustainability of growth esp given macro concerns.”

D.A. Davidson analyst Rishi Jaluria told Benzinga that profit taking and rotation can create buying opportunities for long-term investors.

“I would note most of the names getting hit are high multiple names that have had impressive run ups,” Juria said. He said Twilio looks particularly appealing.

“It’s one of my favorite ways to play the trend of ‘software is eating the world’ and the growing empowerment of developers,” he said.

Roku’s Rough Day

Wedbush analyst Michael Pachter said there’s certainly no clear fundamental catalyst for the Roku sell-off.

“[I]t’s a momentum stock and there really is no good explanation for why it’s gone up as much as it has,” Pachter said.

D.A. Davidson analyst Tom Forte said Roku shares are likely just consolidating.

“Seems to me the market is taking a breather. Stock has had a nice run, including very recently,” Forte told Benzinga.

Benzinga’s Take

Without any major fundamental news, traders should consider Monday’s trading action as a potential rebalancing within the tech sector among some of the best-performing stocks and market laggards. Traders will get more clarity in the coming days on whether or not Monday;s trading action will be short-lived or potentially represents a longer-term shift in tech investor sentiment.

Do you agree with this take? Email feedback@benzinga.com with your thoughts.

Othonas Economopoulos contributed to this report.

Related Links:

Short Squeeze Candidates: 10 Most Heavily Shorted Stocks

How Amazon, Wayfair Are Getting Hit By Trump's Latest Tariffs

For the latest in financial news, exclusive stories, memes follow Benzinga on Twitter, Facebook & Instagram. For the best interviews, stock market talk & videos, subscribe to Benzinga Podcasts and our YouTube channel.


Related Articles

Why Apple Is A 'Top Tech Name' To Own Right Now

Why Apple Is A 'Top Tech Name' To Own Right Now

Apple Inc. (NASDAQ: AAPL) shares raced back to all-time highs Monday amid optimism concerning its imminent hardware releases. read more
How FAANGs Could Benefit From Chinese Regulatory Scrutiny Of Domestic Tech Stocks

How FAANGs Could Benefit From Chinese Regulatory Scrutiny Of Domestic Tech Stocks

Chinese regulators have started to tighten the leash on high-flying Chinese tech stalwarts such as Tencent Holdings Limited (OTC: TCEHY), Alibaba Group Holding Limited (NYSE: BABA), Baidu, Inc. read more
What Analysts Think Of Apple's WWDC21 So Far, Including iOS 15 And Privacy

What Analysts Think Of Apple's WWDC21 So Far, Including iOS 15 And Privacy

Apple Inc (NASDAQ: AAPL) commenced its Worldwide Developers Conference, also known as WWDC21, on Monday, presenting online for the second straight year due to the COVID-19 pandemic. Analysts, of course, paid attention. read more
Why Did These Analysts Increase Facebook Price Targets?

Why Did These Analysts Increase Facebook Price Targets?

Social media giant Facebook Inc (NASDAQ: FB) reported first-quarter revenue growth of 48% year-over-year. read more