5 FTSE stocks affected by recent global tech shock

Highlights 

  • This September was the worst month for tech stocks across the world since the Covid crash, with the Nasdaq 100 going down by 5.91%.
  • The tech stock shock has impacted many countries, including the UK.
  • Short-term volatility is considered to be the price for higher returns by many tech investors.

As stock markets across the globe approach towards an uncertain winter, one specific sector may feel the crisp -- the technology sector. Despite doing amazing last year, September 2021 was the worst month for tech stocks since the Covid crash, with the Nasdaq 100, which is a tech-heavy US index, going down by 5.91%. Since mid-September, Amazon has lost 3.2%, Apple has lost 7.28%, and Alphabet (earlier known as Google) has lost 2.24%.

After facing a bombardment of bad headlines, social media giant Facebook suffered from a loss of around US $100 million. Meanwhile, a wider change in fortune feared by huge investors has led to a fall of 26% in the value of ARK Innovation, which is the Wall Street’s best-known tech fund.

A notable point is that the slowdown in the momentum for tech stocks was already anticipated as the Nasdaq 100 grew by around 47% in 2020 due to the impact of the pandemic lockdowns, making the rebalancing inevitable at some point. Many stocks experienced a big slide as the stock markets fell 18 months ago as their valuations got detached from the reality, according to the chief analyst with the investment platform Charles Stanley, Rob Morgan. Many tech companies had already achieved this realisation.

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The tech stock shock has impacted many countries, including the UK. For example, the value of FTSE-listed cryptocurrency miner, Argo Blockchain, has plunged by 55% since February, after witnessing a boom of popularity among DIY investors.

Inflation threats are also rising, leading to the expectation of higher returns from investors, which is in turn driving down the asset prices. Tech firms lose attractiveness if the interest rates rise, as they hit their profit forecasts.

Short-term volatility is considered to be the price for higher returns by many tech investors. Baillie Gifford, who is among the top tech advocates in the UK, follows a philosophy of picking out ‘superstar’ companies which have the ability to surpass the market. Such companies can provide significant returns to cover the failed bets.

Let’s take a look at some of the UK tech stocks that may be impacted by the shock.

Argo Blockchain PLC (LON: ARB)

Argo Blockchain PLC primarily focuses on large scale cryptocurrency mining. Its current market capitalisation is £547.29 million, and it has given a significant return of 2,215.47% in 1 year. Argo Blockchain PLC’s shares were trading at GBX 127.50 at 11:56 AM GMT+1 on 20 October 2021.

Dev Clever Holdings PLC (LON: DEV)

Dev Clever Holdings PLC provides its services to a wide range of blue-chip clients and educator customers. Its current market cap stands at £206.01 million, and it has given a return of 287.43% in 1 year. Dev Clever Holdings PLC’s shares were trading at GBX 34.00 at 12:00 PM GMT+1 on 20 October 2021.

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Kape Technologies PLC (LON: KAPE)

Kape Technologies PLC is engaged in the development and distribution of a wide range of digital products in the online security space. Its current market cap stands at £1,219.57 million, and it has given a return of 147.47% in 1 year. Kape Technologies PLC’s shares were trading at GBX 405.00 at 12:07 PM GMT+1 on 20 October 2021.

Zoo Digital Group plc (LON: ZOO)

Zoo Digital Group plc offers cloud software-based subtitling, dubbing and media localization services to the TV and movie industry. Its current market cap stands at £116.06 million, and it has given a return of 135.84% in 1 year. Zoo Digital Group PLC’s shares were trading at GBX 132.50 at 12:10 PM GMT+1 on 20 October 2021.

essensys PLC (LON: ESYS)

essensys PLC offers a compact platform with the software and digital infrastructure for next-generation flexible workspace experiences. Its current market cap stands at £173.84 million, and it has given a return of 85.19% in 1 year. essensys PLC’s shares were trading at GBX 270.00 at 12:13 PM GMT+1 on 20 October 2021.

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