This Week in Tech Stocks – Slackers, Beaters and Trade War Easing
We’re going to be doing a new regular column here at the Wccftech Finance section looking back at the big movers and shakers of the last week in the tech market as well as the drivers behind the big changes. This week saw a number of large moves in the market as macro-economic considerations returned to be the large driver of market movements given we have almost finished with earnings season for the big tech stocks we follow.
Fairly strong US economic data during the week was counterbalanced by a weaker than expected non-farm payroll number with only 130k jobs being added in August vs the expected consensus of 158k. Even so, growth in US services sectors and the ADP employment numbers came in ahead of expectations along with the fuel for the fire of the trade war of the trade balance coming in half a billion worse than expected with the US sitting at negative $54 billion.
On balance however, the trade war (which has an outsized affect on technology stocks given how many of them manufacture in China, have significant revenue from China or have major supply links through the country) and the much discussed yield curve inversions have made investors nervous. Volatility is up and every tweet from the President or from Chinese government newspaper mouthpieces serves to underline a lot of market movements. Even so, there are major plays occurring on the basis of individual companies.
Major global indices were mostly up and that sets the tone for a lot of the individual stocks we follow here.
The big winner this week on the tech stock front was Dell (NYSE:DELL) which reported better than expected earnings on corporate IT spend. Dell finished the week up over 14% after its return to public markets earlier this year following its eponymous founder taking the company private back in 2013. It should be noted however that since Dell went public again at the end of 2018, the stock has been fairly volatile peaking up around $70 briefly but prior to its jump this week, it was still trading roughly at the price it returned to markets at ($46 per share).
Micron (NASDAQ:MU) also had a good week, finishing up almost 10% and is trading at close to a 52 week high on the back of hope for a trade deal between the US and China. Micron was the big tech winner this week on the hopes of a deal but let’s not forget the other stocks which are particularly sensitive to trade tensions. We also saw gains for Intel (Up over 8.5% for the week NASDAQ:INTC), NVIDIA (up almost 7% for the week NASDAQ:NVDA), Skyworks (up 6.5% for the week NASDAQ:SWKS) and Qorvo (up 5.5% for the week NASDAQ:QRVO). All of these companies have outsized exposure to China and are currently riding high on hopes for an easing of tensions which sees their stocks pummelled every time a bad tweet hits the airwaves and pumped whenever hopes of a deal come about.
On the gaming side, Activision Blizzard (up over 7% for the week NASDAQ:ATVI) scored well with analysts who upgraded it on the back of reports that Overwatch will come to the Nintendo Switch. Check out our coverage of that story here.
On to the downside, slightly slim pickings this week given the overall rise in global markets on the easing of trade tensions. Perhaps unsurprisingly however, we begin with Lyft (NASDAQ:LYFT) which capped off a glum week to finish down about 10.5% on the back of people wondering if the ride hailing model will ever actually turn a profit. Uber (NYSE:UBER) also suffered, although it took its major beating to the stock price back in August. Both companies however are well below their IPO prices with Lyft having lost over 38% since listing and Uber down almost 30% and the long term question mark over whether these businesses can ever be profitable or are just big tech companies burning through investor and VC money while the going is good.
The other major loser this week was Slack (NYSE:WORK) which finishes down more than 8.5% despite beating expectations on earnings on the back of over $8 million in lost revenue which the company automatically awarded to customers due to its policy on service outages and proactively giving them credit whether customers request it or not. Slack's messaging platform had a couple of hours downtime and hence the payout. The firm went public earlier this year with a direct listing rather than a traditional IPO offering and is currently sitting on a war chest of about $800 million as a result. Of the big tech companies going public however it is still doing better than Uber and Lyft given that it’s actually slightly up on the reference price the NYSE placed on it at launch ($26).
That’s pretty much it for this week folks. Next week we have the University of Michigan consumer sentiment index preliminary numbers for the month as well as Broadcom’s (NASDAQ:AVGO) earnings report. US – China trade talks are not expected to restart until early October so maybe the market will be able to catch its breath for a few weeks on that front while Brexit stakes ramp up next week as the Prime Minister is expected to be forced by parliament to request an extension to the current deadline of the end of October. Twists and turns in that saga have been a major drag on the pound and the risk of other British technology companies being taken over if Sterling falls in a big way remain profound.
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