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Summary
- As most stocks plummeted and investors became skeptical about parking their funds, stocks of technology companies surged to notable levels on the back of the rising demand of tech services in a lockdown scenario.
- But at the same time, due to sudden bouts of selloffs, tech stocks also registered massive amounts of volatility.
- Market sentiments in Canada have been largely affected by COVID-19 vaccine rollout, coaxing investors to pull out their capital from tech stocks and invest in other improving sectors.
The pandemic-beaten year of 2020 was a rollercoaster ride for stock markets all over the world. As most stocks plummeted and investors grew skeptical about parking their funds, stocks of technology companies surged to notable levels on the back of the rising demand of tech services in a lockdown scenario. But at the same time, due to sudden bouts of selloffs, tech stocks also registered massive amounts of volatility.
Experts have pointed that because of the unpredictability of its consumption by end users, tech companies often find their stocks to be more prone to volatility.
A survey conducted by global consulting firm McKinsey & Company found that a rising number of companies across North America are adopting digitization in their internal operations and service in an unprecedented manner.
©Kalkine Group 2021
Can Zoom & Shopify Serve As Examples?
As the need for online shopping and remote working rose amid the pandemic, Canadian e-commerce company Shopify Inc (TSX:SHOP) and California-based Zoom Video Communications (NASDAQ:ZM) recorded a significant rise in their demand and sales. Simultaneously , their stock prices also recorded substantial spikes.
In the latter half of February 2021 (February 17-26), however, Zoom stock recorded a slide in its price. Shopify stocks too have been heading south since mid-February, trading about one per cent lower on Monday, March 1 (10.30AM EST).
Some experts believe that the tech stock volatility, disregard of the companies’ fundamentals, is here to stay.
Market sentiments in Canada have been largely affected by COVID-19 vaccine rollout, coaxing investors to pull out their capital from tech stocks and invest in other improving sectors. If this trend continues, the marathon rise that tech stocks recorded in 2020 may hit the brakes.
