More than half of all tech stocks on the ASX are in the red this year
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Australia may not be known as a global tech hub, but there’s still plenty of activity on the ASX boards for companies which are tech or tech-adjacent.
The data team at Stockhead took a broad snapshot of stocks across the major tech sectors, and chopped up the data get a clearer picture of what’s working and what’s not.
A total of 159 stocks made the list. By industry, they created four separate divisions for further analysis:
How did each sector perform? As ever in the world of small caps, there’s been some standout performers. But the broader thematic makes for relatively grim viewing, at least to this point of the year.
More than half (85) of the stocks listed are in the red for 2019, with 68 posting gains while the other six are flat on the year.
Factoring in some big gains, the average return across all four divisions was 11.1%, but the median return was a less-than-stellar -6.2 per cent.
One clear observation is that Australia’s tech scene is software-focused; no less than 91 companies were classified as software providers, comprising around 57 per cent of the total.
The rest were made up of IT Services stocks (41); Communications & Electronics Equipment (29) and Semiconductor/Tech Hardware (12).
Here’s a snapshot of the standout performers and key themes in each division.
When measured by average gains, IT Services companies have ruled the most among Australia’s listed tech stocks so far in 2019.
That’s largely because falling within this category are the red-hot buy now, pay later (BNPL) stocks that have been surging up the boards.
New addition Splitit (ASX: SPT) joined the fray back in February when it listed at 20 cents per share. It’s up more than 300 per cent this year, but the stock has come back sharply since it surged all the way to $1.68 as the BNPL hype hit fever pitch.
Competitor Zip Co (ASX: Z1P) has climbed by a similar amount, with most of those gains realised in recent weeks after its Q3 figures revealed strong revenue growth in the three months to March.
Also hanging near the top of the pops is Fintech Chain (ASX: FTC), a somewhat colourful outfit based out of Hong Kong which claimed to have invented the word “blockchainisation” last year.
In 2019, the story of the day has Chinese commerce, with investors excited by a series of deals FTC struck with middle kingdom merchants to deploy its payments faciliation platform and point-of-sale checkouts.
All up, IT Services had the best win/loss ratio of the four tech divisions, with 15 companies gaining ground while 11 were in the red.
Here are the best (and worst) of the sector so far this year.
Audio fidelity company Audinate (ASX: AD8) is still a market darling, almost two years after first listing in June 2017 at $1.53.
It’s now trading above $7, having gained more than 100 per cent so far this year. The company offers technology that improves the transition of media through standard IT networks, which it sells to equipment manufacturers such as Bosch and Panasonic.
While Audinate is the standout performer, the equipment sector has been the least volatile of the four divisions, with a smaller divergence between the best and worst performers.
A total of 12 companies are up for the year, with 16 others in negative territory.
As Stockhead‘s Rachel Williamson highlighted earlier this week, Australia was late to the party when it came to establishing a global semiconductor hub.
But there’s still a small number of listed companies from Australia, Israel and US with either direct or indirect exposure to the industry.
The best performer so far this year is Silex Systems (ASX: SLX) which, as it turns out, is primarily focused on uranium enrichment. But the company has a side-hustle selling component parts for semiconductors to a UK manufacturer.
The stock is up almost 90 per cent this year, following a surge in early February when it announced a licensing agreement in Canada for its laser uranium
On the other end of the spectrum is Brainchip Holdings (ASX: BRN), which says it utilises AI to design less chips that are less power-reliant, for uses such as big-data analysis and driverless car technology.
Here’s how the sector has performed so far this year:
Contrary to the semiconductor industry, Australia has an abundance of listed software companies (91 to be precise).
While the sector is more crowded, it’s not necessarily booming; no less than 50 companies have lost ground so far this year, against 37 gains.
Fintech 8Common (ASX: 8CO) got off to a solid start, and has been roaring ahead since mid-April following the release of some positive March quarter earnings results.
The company responded to a price query from the ASX in early May (nothing to see here) before signing a $544,754 contract with the federal government on May 10.
Three other companies have posted gains of at least 100 per cent; Netlinkz Ltd (ASX: NET), Dubber Corp (ASX: DUB) and BigTinCan Holdings (ASX: BTH).
Here’s the full rundown of ASX software performers in 2019. It’s a long list comprised of fields across crypto, blockchain, payments and cybersecurity: