SALT LAKE CITY — Some of Utah’s biggest tech stocks, in spite of some robust individual company performances, are following downward trends, and at least a few analysts are beginning to fly bear market flags.
Stocks like Facebook, Apple, Amazon, Netflix and Google have been the primary drivers of tech’s bull market run, but thanks to multiple factors including interest rate changes and fears of impending international trade disputes, a wave of sell-offs has brought the exuberance to an end, at least for the time being.
Utah cloud-based tech education company Pluralsight took off like a rocket following its public stock offering in May and has been churning very positive numbers for its newly minted owners. CEO and co-founder Aaron Skonnard noted his company’s streak in an earnings call this week.
“We continue to see strong momentum across our business in the third quarter and achieved our sixth consecutive quarter of greater than 50 percent growth in (business-to-business) billings,” Skonnard said. “We continue to invest across our business, while demonstrating the inherent levers to profitability on our model.”
Even so, Pluralsight’s stock was trading at $22.12 per share at the end of regular trading Friday, down from a high of $38.37 per share in early September.
Apple, Microsoft and Netflix have also posted steep declines. Amazon and Google-parent Alphabet, respectively the second- and fourth-most valuable U.S. companies, have fallen more than 10 percent from their recent peaks. Facebook, the sixth-largest company, has shed 29 percent since late July.
“The sell-off was perhaps a little overdone,” Lindsey Bell, investment strategist at CFRA told the Associated Press. “A lot of it may have been investors just kind of taking profits in some of the high-flyers of the year that also have high valuations.”
Analysts note bond prices are up and interest rates tend to follow increases in bond yields, eroding profits for companies, which have to pay higher interest-rate costs to borrow money.
Technology and internet-based companies are known for their high profit margins, and many have reported explosive growth in recent years, with corresponding gains in their stock prices. That’s made them particularly vulnerable to higher interest rates, because it makes the stocks’ already high valuations look even more stretched.
Investors have other reasons to worry about the tech sector stocks.
Those include the potential impact that the U.S.-China trade dispute may have on big tech companies, which tend to do a lot of business in China.
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Source:: Deseret News – Business News