Afterpay founders down $2bn as tech wreck takes toll

Afterpay founders Anthony Eisen and Nick Molnar have collectively seen $2bn of their personal fortunes torched in recent weeks.

Afterpay founders Nick Molnar and Anthony Eisen. Picture: Supplied

The global tech wreck on international equities markets that caused the Nasdaq to plunge into official correction territory has proved seriously dangerous to the wealth of Australia’s leading technology entrepreneurs — led by Afterpay founders Anthony Eisen and Nick Molnar, who have collectively seen $2bn of their personal fortunes torched.

Long the darling of the tech sector and its flag bearer, the “buy now, pay later” player Afterpay has witnessed a drop of almost a third in its share price and market capitalisation since its peak early last month. That has wiped off billions of dollars not just for its co-founders but for investors large and small who have punted on the company.

It was only a fortnight ago that Afterpay took advantage of a more lofty share price of just under $135 to raise $1.5bn from investors, but since then the share price has tanked, along with other BNPL stocks and a broader range of tech, or growth, stocks that have for many months led the market higher and greatly enriched their shareholders.

Both Mr Eisen and Mr Molnar have seen the value of their shares collapse $1.15bn from the February 10 peak of $158.47.

Afterpay shares have been caught up in the tech slide as bond yields around the world have surged.

That slide has now turned into a fully fledged rout. On Tuesday Afterpay shares hit a session low of $99.80, although they later waged a fightback to end the trading day down $4.01 at $107.19 — a near four-month low.

Mr Eisen and Mr Molnar both hold about 19 million shares in Afterpay and, although still fabulously rich, they have quickly moved towards a lower tax bracket as the Afterpay stock has plummeted.

Despite a recent selldown by the co-founders and the price slide, the pair are still valued at $1.99bn each.

Other technology businessmen feeling some of their pain are chief executives such as WiseTech Global’s Richard White, whose personal fortune has dropped about $940m since the tech wreck began, as the software company’s market capitalisation has shrunk by one fifth.

It has been a similar story elsewhere in the BNPL sector. Zip Co is down 36 per cent from its mid-February high, Openpay is down 25 per cent, Sezzle down 31 per cent and Splitit down 30 per cent from February peaks.

Local investors once enamoured and dazzled by the huge growth potential of technology stocks have suddenly and rapidly pivoted from greed to fear and are taking much of their guidance from the Nasdaq, which this week continued to drop and officially entered a correction as the cumulative falls since February exceeded 10 per cent. This is in turn being driven by the six-week-long sell-off in US government bonds that has dented the enthusiasm and demand for tech and growth stocks.

US tech high-flyer Tesla is now trading a little closer to earth. Its shares are down 20 per cent this year, while Netflix is down 16 per cent and Apple down 18 per cent from its peak in late January.

Bell Potter analyst Richard Coppleson said savage sell-offs in the tech sector were quite normal and said it followed the sector getting very hot last month as record inflows worldwide poured into technology companies.

“It is normal for ‘growth stocks’ to have big intermittent sell-offs — as they are trading on infinity-type PEs — that make them difficult to value on traditional metrics,” he said.

“So when the highly balanced valuation metrics that they and other tech stocks are on frequently becomes challenged — this time is bond yields rising and thus valuation metrics are under question — so the market does what it always does in these situations. It sells first and as it does we see the hot money run for the exits and thus the falls are usually quite savage.”