Tag: Motley Fool

The Race Oncology Ltd (ASX: RAC) share price is gaining today, up 5% in late morning trade.

The ASX healthcare share entered a trading halt on Monday prior to disclosing the details of a capital raising, which it released this morning.

Race Oncology’s primary focus is its cancer drug, Bisantrene. Bisantrene has been shown to inhibit overexpression of the fat mass and obesity associated (FTO) protein, linked to a wide range of cancers.

What did Race Oncology report on its capital raising?

The Race Oncology share price is moving higher today after the company reported it had raised $5.4 million from institutional and sophisticated investors in an oversubscribed placement. The capital raise is not subject to shareholder approval.

Race will issue approximately 1.8 million new shares at $3.00 per share. The stock is currently trading for $3.22 per share.

The company also revealed that participants in the capital raising will get 1 attaching option (exercisable at $4.50 and expiring 16 May 2022) for every 20 new shares they subscribed to at no cost.

Existing shareholders are also eligible for the 1 bonus option per 20 shares they hold on a pro-rata non-renounceable basis. Race reported it wants to reward its loyal shareholders while also helping grow the company.

Race plans to use the new capital to help develop Bisantrene.

Commenting on the successful capital raising, Race’s CEO, Phil Lynch said:

This new funding supports efforts to deliver outsized returns to shareholders via our Three Pillar strategy, where we are investigating Bisantrene as both a potential precision oncology agent, and as a heart-friendlier chemotherapeutic.

Daniel Tillett, Race’s CSO added, “We believe that this raise will accelerate our plans and rewards our loyal shareholders.”

The company said it expects the new shares and placement options will be allotted and issued by 14 May.

Race Oncology share price snapshot

It’s been a truly stellar year for Race Oncology shareholders, with shares up 794% over the past 12 months. For some perspective, the All Ordinaries Index (ASX: XAO) has gained 34% over that same time.

Year-to-date the Race Oncology share price has continued to outperform, with shares up 66% so far in 2021.

More reading

• Why the Race Oncology (ASX:RAC) share price is frozen
• Why the Race Oncology (ASX:RAC) share price is racing higher
• Why Ampol, Netwealth, Orocobre, & Race Oncology shares are storming higher
• Why the Race Oncology (ASX:RAC) share price is rocketing 10% higher

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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At some point, you have to just admit it.

Yep, even the professionals.

Even the ones who’ve been doing this for years.

So it’s my turn.

I. Was. Wrong.

Thing is, I’m still not sure why. I mean, it’s not the first time I’ve been wrong.

It sure as hell won’t be the last.

But it still hurts.

The company in question, this time, is financial services mob, Challenger. It’s the business that, among other things, has a dominant market share in annuities.

(For the uninitiated, annuities are products sold to people who want to swap their lump sum for a regular income stream instead — essentially giving up some potential upside in exchange for not needing to sweat on market volatility — usually in retirement.)

When we recommended members of Motley Fool Share Advisor buy Challenger shares, the thesis was pretty simple.

There are greater numbers of people retiring than ever in Australia.

The scars of the GFC were — are — deep and raw for them.

Financial planners, in general, tend to love annuities.

And the return offered to Challenger’s annuity customers was sufficiently low that the company should have had more than enough margin to play with.

So, a top-notch brand, good margins, and a growing customer base egged on by their financial advisors…

Should’ve been a lock.

And yet…

And yet, earnings didn’t go anywhere for a decade.

(They went negative in 2020 actually, but that’s an understandable exception.)

Yes, falling interest rates didn’t help.

But those tailwinds.

Those (expected) margins.

In the event, we probably held on too long.

But it was one of those situations where the logic just seemed pretty straightforward.

So we — I — waited for the thesis to play out.

And waited.

And waited.

In the end, it was a chat with the team that ended up determining the fate of the recommendation.

I — again — explained why Challenger should be a great company.

Should achieve great results.

Should be a great recommendation.

I still think the logic is sound.

And yet, as Yogi Berra (might have) said, “In theory, there is no difference between theory and practice. In practice there is”.

Even as I was explaining it to the team, I was mentally asking myself a version of that statement.

“If you’re so right, where are the results?”

Now, I’m no stranger to being patient. 

Some of my best recommendations have taken time to really hit their straps. Others have been volatile, falling before they rose, and went higher.

So, I don’t mind waiting, if the results are going to come.

But how long do you wait?

How long can you suspend disbelief… or at least suspend the growing feeling that theory and practice were diverging, with no signs of the gap getting smaller any time soon?

In the end, reality always wins.

And so, we decided to recommend our members sell their Challenger shares.

Now, that doesn’t mean that, thanks to Murphy’s Law, the business performance won’t suddenly improve.

Anything could happen from here.

But there’s just insufficient evidence to say it’s likely.

And at some point, you just have to call time on an idea.

Was the thesis wrong? Maybe.

Did business circumstances change? Probably.

Is this an execution problem that could be fixed? It’s possible.

But, just as insanity is often described as ‘doing the same thing and expecting a different result’, at some point you’ve gotta just admit defeat on an idea.

It’s important, though, to remember that I haven’t talked about the share price, thus far. 

Because that had nothing to do with our decision.

The share price simply tells you what the market is thinking, not how a business is performing.

And those are — hopefully obviously — two different things.

That doesn’t mean they can’t be saying the same thing, sometimes.

But they’re not a perfect proxy for each other.

And that’s important.

We’ve made winning recommendations whose shares stayed underwater for a long time.

We’ve had losers that got off to wonderful starts, but then crashed and burned.

And lots in between.

To beat the market, you have to do something different to the market.

That means you need to ignore what it’s ‘telling’ you, and start using its wild swings to your advantage.

And, it means selling when your thesis is not likely to play out (regardless of the reason).

It’s true that one of my guiding maxims is ‘be slow to buy and slower to sell’.

But that’s not “… and never sell”.

Or, to invoke a well known (and much loved) piece of advice: “you’ve gotta know when to hold ’em, and when to fold ’em”.

Challenger has had a chance.

Actually, a lot of chances.

But it was time to pull the pin.

I am glad to say it’s generally the exception. Most of our recommendations are market-beating. 

And our average is soundly above the ASX, too. 

So we’re doing something right.

(Though, as the lawyers — rightly — ask us to point out, past performance is no guarantee of future success.)

But it’s a reminder that not everything will go well.

And that, after enough chances, sometimes you just have to call an investment a loss and move on.

To hopefully bigger and better things.

Just remember: you make those calls, not the market.

More reading

• Are Coinbase (NASDAQ:COIN) shares worth a look?
• GameStop opening fulfillment center in e-commerce transformation
• Why the Ecofibre (ASX:EOF) share price is soaring 9% higher today
• Why the IkeGPS (ASX:IKE) share price is surging today
• Why the Kirkland Lake Gold (ASX:KLA) share price is rising today

Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Cryptocurrency is hot at the moment, so exchange operator Coinbase Global Inc (NASDAQ: COIN) has demanded much attention since its direct listing last month.

But its US$50 billion float valuation had many scratching their heads as to whether it’s starting too high.

Investors were asking this very question on Coinbase’s first day on the NASDAQ on 15 April, with the price going up and down wildly.

So with currencies like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETC) still all the rage, is it worth dabbling in Coinbase?

Frazis Capital portfolio manager Michael Frazis, in a video update to clients, said his team “really likes” the stock.

“It’s not trading as expensively as you think… It would be less than 20 times [enterprise value to sales ratio]. I think it was 17 times sales.”

In fact, the stock closed Wednesday morning at US$280.66, dropping 4.61%. 

That’s only 12% above the listing reference price, and after it had been up as high as US$429.54 during its first week in the market.

Institutional investors need a trusted cryptocurrency platform 

According to Frazis, cryptocurrency “is heading mainstream” and “every professional investor is thinking about it”.

This is where Coinbase comes in, as the “most trusted counterparty” in a wild unregulated emerging market.

“If you have other people’s money, you want to make sure your custody is rock-solid. And I don’t think any of the other exchanges other than Coinbase really offer that,” he said.

“You want to go to the best… Being known as the best custodian, being insured, and being properly regulated… puts Coinbase in a really strong position for all those institutional flows.”

The business model is lucrative, according to Frazis.

“Like a brokerage, they charge so much – and it’s an extremely profitable business.”

“They benefit from flows and volumes, and they certainly benefit from [cryptocurrency] price increase as well, because it increases the volumes.”

Don’t go all-in on Coinbase though

While the business model and share price look attractive, Frazis reckons anyone considering investing should do so in small increments with a long-term horizon.

This is because the business had its big ramp-up in valuation in the 12 to 24 months before listing.

“That was the big move, so that’s not going to happen again,” he said.

“If Coinbase trades sideways or down for a year, it could wind up for another explosive movement. But I don’t think you’ll get a quick buck there – but it’s a very good long-term investment.”

More reading

• Here are the US shares that ASX investors were buying last week
• Warren Buffett hates Bitcoin. Here’s why
• How Tether is fuelling the Bitcoin price rally
• Some takeaways from Warren Buffett’s Berkshire Hathaway meeting
• ASX 200 Weekly Wrap: Shares have average week but a great month

Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Bitcoin. The Motley Fool Australia has no position in any of the stocks mentioned. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

GameStop‘s (NYSE: GME) transformation into a digital video-game marketplace advanced to the next phase as the retailer today announced it was leasing a new 700,000-square-foot fulfillment center dedicated to its e-commerce ambitions.

The move seems to be a direct evolution of GameStop’s appointment in March of Jenna Owens to be its executive vice president and chief operating officer. Prior to joining the video game retailer, Owens was a senior executive at Amazon, where her responsibilities included distribution and multichannel fulfillment.

Activist investor and interim chairman Ryan Cohen had previously made the audacious claim that he wanted to transform GameStop into the “Amazon of gaming.”

Building out and modernizing the video game retailer’s fulfillment network to improve the speed of delivery and service to customers was one of the six pillars of investment GameStop announced this year as part of it becoming “a customer-obsessed technology company to delight gamers.”

The new fulfillment center will be in York, Pennsylvania, and is expected to be operational by the fourth quarter. The goal is to expand its product offerings and speed up delivery on the East Coast.

Another of its investment pillars is adding PC gaming, computers, monitors, game tables, mobile gaming, and gaming TVs to its product lineup. Now, the video game retailer will have the warehouse to store all those goods.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Here are the US shares that ASX investors were buying last week
• Why Robinhood is having a go at Warren Buffett
• GameStop, soon to be debt-free, adds $551 million to coffers
• Aussie investors snapped up Coinbase (NASDAQ:COIN) shares last week
• ‘It makes me nervous’: Expert worried about ‘crazy’ market

Rich Duprey has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Ecofibre Ltd (ASX: EOF) share price is on the move during mid-morning trade after providing an interim investor update.

At the time of writing, the hemp company’s shares are swapping hands for as much as 86.5 cents apiece, up 9.4%.

What did Ecofibre announce?

Investors are fighting to get a hold of Ecofibre shares following the company’s strong recovery of business growth.

In a statement to the ASX, Ecofibre revealed improved momentum in its core United States independent pharmacy business. In April alone, the Ananda Professional pharmacy segment saw its best month since September 2020.

As a result, the company reaffirmed its profit guidance released in February for the FY21 period.

Ecofibre expects profit to come at a loss of $1.5 million for the second half of the year. This will contribute to an overall forecasted loss of around $7 million for FY21.

Pleasingly, the H2 FY21 profit is looking to include roughly US$1.8 million from employee retention credits. The funds to be received fall under former President Trump’s ‘Taxpayer Certainty and Disaster Tax Relief Act of 2020’. This was a coronavirus relief and spending bill to assist businesses that were forced to close during the government-mandated lockdown.

Ecofibre CEO, Eric Wang touched on the company’s progress saying:

Since the middle of March, we have seen a good return to growth in our core independent pharmacy channel as COVID related disruptions subside.

We see trading conditions improving for our core independent pharmacy channel as the US moves into post-COVID environment. We look forward to Ananda Health revenues returning to pre-COVID levels in due course.

Ecofibre share price snapshot

While today’s positive announcement lifted Ecofibre shares, yearly performance has not been so kind to investors. The company’s share price has fallen more than 70% from the past 12 months and is down almost 60% year-to-date.

Ecofibre has a market capitalisation of approximately $271 million, with about 339.3 million shares on issue.

More reading

• Why Airtasker, Ecofibre, Nuix, & Woolworths shares are sinking

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The IkeGPS Group Ltd (ASX: IKE) share price is shooting higher today after a positive contract announcement.

At the time of writing, the IKE share price is up 4.6%, trading at 90 cents apiece.

IKE collects and analyses pole and overhead asset data for utilities and engineering firms. Below we take a look at the company’s latest news.

What did IKE report this morning?

The IKE share price is lifting after the company reported it had extended an agreement with a Fortune 100 United States electric utility. IKE is working with the company to assess and design its infrastructure.

The contract extension will boost IKE’s transaction revenue in the 2022 financial year (the period ending 31 March 2022) by $1.2 million. On the newly extended agreement, the utility customer’s contract value has increased more than 4-fold since the initial contract was signed in October 2020.

IKE reported the utility would make use of its platform to evaluate some 350,000 power pole assets. The contract goes into effect immediately.

What did management say?

IKE CEO Glenn Milnes welcomed the contract extension, saying:

The expansion of this existing customer contract demonstrates the value that the IKE platform provides to large electric utilities, and confirms our ability to expand the use of our platform over time across targeted tier-1 infrastructure operators…

We are also pleased with the broader strength of new contract wins over the quarter to 31 March, of approximately $5.4 million, and now with contract wins in the initial weeks of Q1 FY22, of approximately $2.2 million. This provides real momentum for growth for our FY22 to March 2022.

Atop the contract extension announced today, IKE added that it closed record contracts in Q4 (ending 31 March) for approximately $5.4 million. The company will record most of that revenue in the 2022 financial year.

IKE’s full-year revenue for the 2021 financial year came in at roughly $9.3 million. That figure, still subject to audit, is in line with market expectations.

IKE share price snapshot

Over the past 12 months, IKE shares have outperformed, up 53% compared to the 34% gain on the All Ordinaries Index (ASX: XAO).

Year-to-date, the IKE share price has gone the other way and is down 17% so far in 2021.

More reading

• Why the Ecofibre (ASX:EOF) share price is soaring 9% higher today
• Why the Kirkland Lake Gold (ASX:KLA) share price is rising today
• Healius (ASX:HLS) share price pushes higher on solid Q3 update
• City Chic (ASX:CCX) share price on watch on trading update
• ASX 200 tech shares under pressure after Nasdaq selloff

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The Kirkland Lake Gold Ltd (ASX: KLA) share price is rising in morning trade. At the time of writing, the Kirkland Lake Gold share price is up 0.56%, trading at $50.

The ASX gold producer, with a market cap of $13.3 billion, has mines in Canada and Australia targeting a combined 1.3—1.4 million ounces of production in 2021.

Below, we take a look at the company’s latest drill results.

What drill results did Kirkland Lake Gold report?

Kirkland Lake Gold’s share price is moving higher after the company reported striking new wide, high-grade gold intersections at its Detour Lake mine in Ontario, Canada.

Kirkland said the drill results confirm the potential for mineral resource growth. In particular, between its existing Main Pit and a newly planned West Pit, both at depth and to the west.

Today’s results come from 38 holes and 2 wedge holes (totalling 23,911 metres) of drilling. They represent the 5th batch of results from the company’s 270,000 metre drilling exploration program. Kirkland is aiming to complete the program by the end of 2021.

Commenting on the latest results, Tony Makuch, Kirkland Lake Gold’s CEO said:

New wide, high-grade intersections continue to confirm the continuity of the mineralized corridor connecting the Main Pit and planned West Pit. We are also having success intersecting high-grade mineralisation near the bottom of the Mineral Resource pit shell in the Saddle Zone, which highlights the potential to add significant new open-pit, and possibly underground, Mineral Resources…

The drilling results we have announced today provide us with even greater confidence that the 2022 technical report will clearly establish Detour Lake as one of the world’s premier gold mines.

Makuch added that the company is still expanding mineralisation to the west of its planned West Pit. According to Makuch, the full expanse of the deposit has yet to be determined.

Kirkland Lake Gold share price snapshot

It hasn’t been the best year for Kirkland Lake Gold shareholders, with shares down 22% over the past 12 months. Over that same time, the S&P/ASX 200 Index (ASX: XJO) gained 31%.

Year-to-date the Kirkland Lake Gold share price remains in the red, down 8%.

More reading

• Why the Ecofibre (ASX:EOF) share price is soaring 9% higher today
• Why the IkeGPS (ASX:IKE) share price is surging today
• Healius (ASX:HLS) share price pushes higher on solid Q3 update
• City Chic (ASX:CCX) share price on watch on trading update
• ASX 200 tech shares under pressure after Nasdaq selloff

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The Healius Ltd (ASX: HLS) share price is edging higher on Wednesday morning following the release of a trading update.

In early trade, the healthcare company’s shares are up 0.5% to $4.10.

How is Healius performing in FY 2021?

According to the release, Healius delivered a strong trading performance in the third quarter of FY 2021. Though, it does acknowledge that it was cycling weaker comparative data late in the period.

In respect to its Pathology business, Healius reported that COVID testing continues, with the company recently reaching 3 million COVID tests in total. This includes over 800,000 tests undertaken in the third quarter, which was on par with its first half levels.

Management advised that this includes a growing amount of commercial COVID testing.

Positively, non-COVID Pathology revenue was solid during the third quarter. This led to 5% growth compared to the prior corresponding period. It was also higher than first half levels. A positive test mix has been supporting higher average fees.

The company’s Imaging business performed positively during the third quarter. Healius reported an 8% increase in revenue compared to the prior corresponding period.

Management notes that it has experienced different recovery rates in different states, with Victoria showing a progressive recovery.

Finally, its Day Hospitals business was a particularly positive performer during the third quarter. It reported a 25% increase in revenue over the prior corresponding period. This was driven largely by its Montserrat hospital.

The company also advised that its Westside Private Hospital performed nearly 1,000 procedures in March, its best month to-date. It also successfully completed its first hip and knee replacements.

Another positive was that its Adora Fertility continued to trade profitably. Though, management revealed that it is exploring potential sale options for the IVF business. These options are in the preliminary stages and no decision has yet been made.

The Healius share price is now up 67% over the last 12 months.

More reading

• This is the best of the big ASX banks: fundie

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The City Chic Collective Ltd (ASX: CCX) share price is on watch today after the retail business revealed a trading update.

What does City Chic do?

City Chic is a global apparel, footwear and accessories retailer for plus-size women. It has an established footprint in Australia, New Zealand and the US. It also recently entered the UK with the acquisition of Evans.

The company gave a presentation about its business and the current trading conditions.

In the 12 months to December 2020, it generated $209 million of global sales. Around 73% of those sales were online, up from 36% in FY18. It had 801,000 active customers at December 2020 and 42 million global online traffic visits over the 12 months to December 2020.

For the 2020 calendar year, 45% of sales were made in the northern hemisphere, up from 16% of sales in FY18.

Plus-size market growth

City Chic said that the plus-size market is forecast to grow by 7% annually. The average annual spend in plus-size is currently materially less than the rest of the women’s apparel market. The retailer pointed out that there is an increasing rate of plus-size women globally.

The ASX share was pleased that plus-size women have embraced shopping online. Current online sales represent 25% of total plus-size sales globally, so there’s still plenty of growth potential there. City Chic said there’s strong forecast growth in online channels in the global plus-size market, which is where City Chic is focused.

City Chic sees long-term growth potential

The retailer said there’s significant market share opportunity in the US$49 billion market. Cross-selling of City Chic products to Avenue customers is tracking very well. To capture this US opportunity, it’s expanding its marketing campaigns to grow its customer base and re-engage customers. City Chic is also expanding its existing marketplace partnerships and entering new ones.

In the UK there’s a market share opportunity in the US$7 billion market. The Evans acquisition accelerates this entry.

City Chic is targeting a market entry for ‘conservative value’ in Australia and New Zealand. The website development is underway, targeting a launch in the first half of FY22. It’s leveraging the product stream already designed for Avenue and Evans, whilst leveraging the existing infrastructure.

A market entry into Europe is the final part of the initiative to lead a world of curves. There’s a “significant” market share opportunity in the US$45 billion market. City Chic is currently trialling in Europe with its wholesale channel. The partner marketplace strategy in Europe is well-progressed with the launch expected in the first half of FY22.

Trading update

There has been “strong” positive comparable sales growth and strong customer base growth in the second half of FY21 to date. May and June are typically large trading months, so they are important.

The gross profit margin for all channels has now fully recovered since the higher levels of discounting in early and mid 2020 due to COVID-19.

It’s going to continue to invest in inventory to drive online growth globally as well as its partner business.

ANZ sales are strong. City Chic US website sales are now back to growth, driven by a strong rebound in the dress category in March 2021. Avenue.com is trading well with strong growth. US partner channel sales are still down due to COVID-19, however sales have been recovering. Evans has been fully integrated ahead of schedule and under budget, the COVID lockdowns and restrictions in the UK started to ease from April 2021.

More reading

• 2 exciting small cap ASX shares to buy
• These ASX retail shares continue to surge higher

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The Nasdaq found itself in deep waters on Tuesday as steep declines in mega cap shares pushed the index as much as 3% lower.

Bouncing off intraday lows, the index managed to close 1.88% down for the day. However, the negative sentiment has carried over to ASX 200 tech shares today. 

Why ASX 200 tech shares are coming under pressure 

High profile United States tech companies including Facebook Inc (NASDAQ: FB), Apple Inc (NASDAQ: AAPL), Amazon.com Inc (NASDAQ: AMZN), and Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) all fell between 1.3% to 3.5%. 

Another US-listed tech stock to note is Affirm Holdings Inc (NASDAQ: AFRM) which dived 6.9% lower. The Affirm share price has shed 16% in value in this week alone to set a new all-time record low.

Conversely, cyclical and defensive sectors such as banks, consumer staples, and real estate outperformed and finished near positive territory, helping the Dow Jones Industrial Average Index (DJX: .DJI) to close 0.06% higher. 

This seems to be spelling bad news for the likes of ASX 200 tech shares like Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) as well as fellow buy now, pay later stablemate Sezzle Inc (ASX: SZL).

At the time of writing, the Afterpay share price is trading 2.88% lower at $107.38. Zip shares are also down 2.74%, trading at $7.45. Meanwhile, the Sezzle share price has fallen a painful 4.33% to $8.61.   

Why are tech shares selling off? 

Today’s selloff arguably continues to reinforce the recent rotation out of tech-related sectors, and back into cyclical sectors and value shares. Many stocks that outperformed during the pandemic are suddenly on the back foot as the real economy continues to recover. 

A recent example of this can be seen in the selloff of ASX e-commerce shares such as Kogan.com Ltd (ASX: KGN) and Redbubble Ltd (ASX: RBL).

Why it’s not all doom and gloom 

Despite the weakness in tech, the ASX 200 is heavily weighted towards financials. The US financials sector managed to close 0.7% higher while other notable sectors such as materials and industrials closed a respective 1.04% and 0.41% higher. At the time of writing, three of the big four ASX 200 banks are trading in the green.

If the ASX 200 were to follow in the footsteps of the US market today, the selling pressure could continue to be concentrated in tech and growth-related sectors. 

More reading

• What to do with Redbubble (ASX:RBL) shares: fundie
• 3 buy-rated ASX growth shares for investors in May
• a2 Milk and Zip were among the most traded ASX shares last week
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• Why the Kogan (ASX:KGN) share price was sold off in April

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Facebook. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc and recommends the following options: long January 2022 $1920 calls on Amazon, short March 2023 $130 calls on Apple, short January 2022 $1940 calls on Amazon, and long March 2023 $120 calls on Apple. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Facebook, Kogan.com ltd, and Sezzle Inc. 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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