Key points
- The Megaport share price has dived 31% since January 4
- Shareholders didn’t respond well to the company’s second-quarter update
- The All Technology Index has also dropped nearly 19% in a month.
The Megaport Ltd (ASX: MP1) share price has had a horror start to the year, despite surging 30% in 2021.
The technology company’s shares have fallen 31% since market close on 4 January. However, in today’s trading, they are currently up 1.08% to $13.13.
Let’s take a look at what might be impacting the company’s shares.
What’s happening with Megaport?
The Megaport share price has been on a steady decline for most of the month. However, it took one major hit in mid-January.
Megaport is a global leading provider of elastic interconnection services using software-defined networking.
Shares in the company collapsed 16% on 19 January, after the release of its second-quarter update. Investors sold down the share despite the company reporting an 8% increase in second-quarter revenue to $26.6 million.
However, multiple brokers lowered their price targets due to expectations of greater investment spend. The company reported 2 new SD-Wan partners, 2 leading global value-added distributors and launched its partner portal Vantage Hub.
Since then, the Megaport share price has continued to decline 14% despite no price-sensitive news from the company.
For perspective, the S&P ASX All Technology Index (ASX: XTX) fell 9% in the same time period.
ASX technology share Appen Ltd (ASX: APX) has also gravitated nearly 9% since market close on 19 January, while Altium Limited (ASX: ALU) has nosedived nearly 15%.
On 28 January, Megaport held an extraordinary general meeting, however, the company’s share price showed no movement on this day.
Shareholders voted against the granting of options to directors Michael Klayko, Melinda Snowden, and Glo Gordon. This was despite the board recommending that investors vote in favour of the proposal to retain top talent at the company.
Looking ahead, Goldman Sachs recently rated the Megaport share price as a “buy” with a $20 price target. As my Foolish colleague James reported this week, Goldman Sachs predicts Megaport has an “immense” $129 billion market opportunity.
Megaport share price snapshot
The Megaport share price has rocketed a mammoth 253% in the past three years since January 4, 2019.
Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has returned nearly 26% in the same time period.
The company has a market capitalisation of about $2 billion based on its current share price.
The post Why has ASX tech share Megaport (ASX:MP1) tumbled 31% in a month? appeared first on The Motley Fool Australia.
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More reading
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- 2 exciting ASX growth shares tipped as buys
- What happened to ASX tech shares today?
The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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