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NASDAQ-listed tech stocks have started rebounding from yesterday’s selloff. FAANG stocks are nearly 2 per cent up in Tuesday’s premarket trading.
Silicon Valley-based tech giant Apple (APPL: US or NASDAQ: APPL) was down more than 4 per cent on Monday but has regained nearly 2.2 per cent in the premarket buying today.
The S&P/TSX Capped Information and Technology (IT) Index traded in the red and dropped as much as 1.33 per cent on Monday. Shopify Inc. (TSX:SHOP), the largest company on the TSX by market cap, plunged by 4.56 per cent. However, its NYSE-listed stock has bounced back by 3.45 per cent in the premarket today morning, against the previous loss of 5.18 per cent.
As US-listed tech companies’ get on recovery path today, the Canadian tech stocks may follow suit. Here are some potential catalysts of this tech revival:
- The Organization for Economic Co-operation and Development (OECD) upgraded the global growth forecast from 4.2 per cent to 5.6 per cent this year.
- The US$ 1.9-trillion fiscal stimulus, backed by President Joe Biden, has proved to be an optimistic sentiment for investors.
- The accelerated inoculation drive across the US and Canada may also add some fuel to this recovery. The Canadian IT index has already added 47 per cent this year. However, it has declined by approximately 2.50 per cent year-to-date (YTD).
Let us have a look at the large-cap tech stock’s performance on the Toronto Stock Exchange:
Shopify Inc. (TSX: SHOP)
This C$ 153-billion strong stock mostly leads the Canadian tech market movement. The e-commerce stock has gained 115.78 per cent in one year, outperforming the TSX 300 Composite Index that has increased by 89.09 per cent.
The company had an amazing 2020 due to an extraordinary online shopping demand. Its revenue rose 86 per cent to US$ 2,929.5 million in full-year 2020. Its digital platforms demand may hike in the market on the back of economic revival this year.
In its 2021 outlook, Shopify expects improved consumer spending and balanced offline and online retail services. However, the ongoing e-commerce transition, which amplified in 2020, will likely move with a normalized pace this year.
Source: Kalkine Group @2021
The company projects to generate more revenue in 2021, but it might face tough competition from offline retailers post COVID-19 vaccination.
The stock market correction was there across all the sectors in the last five-day trading sessions. The tech stock has shrunk 17.45 per cent against the TSX Composite Index that has fallen by 18.16. Canadian tech stock may push the index up this week over positive global market sentiments.
