Technology sector slammed as small firms told to trim costs

Tech stocks were some of the worst hit on Monday, as COVID-19 sent shockwaves through the technology and start-up ecosystems.

Afterpay finished the day down 16 per cent at $27.63 Picture: AAP

Australia’s tech stocks were some of the worst hit on Monday, as the coronavirus continued to send shockwaves through the nation’s technology and start-up ecosystems.

The ASX’s so-called “WAAAX” stocks, which have already been badly bruised by fallout from the disease, were pummelled again on Monday.

WiseTech finished more than 10 per cent lower, with its valuation now about $12bn lower than when its shares were at an all-time high in September last year.

AI specialist Appen was sent down 8.88 per cent to close at $19.18. Afterpay finished a whopping 16 per cent lower at $27.63, Altium was down 6.23 per cent at $27.84 and Xero was down 5 per cent at $71.40.

The growing uncertainty has also hit smaller players. ASX-listed fintech outfit Identitii, which was set to raise $3.27m, withdrew its prospectus and cancelled the fundraising due to “unprecedented market volatility”.

Identitii has been one of 10 companies selected by the ACCC in September last year to test a new open banking framework.

The boss of venture capital outfit Square Peg, Paul Bassat, sent a letter to the chief executives of Square Peg’s portfolio companies on Monday warning them that “cash is king” and to plan for the fallout from COVID-19.

“We expect this crisis to affect your businesses differently,” he said. “Some of you are already feeling the impact, and some of you aren’t, yet. We encourage everyone to be doing scenario planning on possible impacts and identifying what actions you might take in response.

“Our general perspective is that you should look to cut costs now if your cash position is not super strong and if you can’t ride out a protracted downturn.”

The coronavirus has also hit tech giant Atlassian, which cancelled its annual Summit conference in Las Vegas. The event was expected to draw several thousand people.

“From our point of view it’s about keeping our employees safe,” Atlassian chief executive Mike Cannon-Brookes told The Australian. “So that’s listening to all the different authorities, the CDC and department of health, and taking all the necessary precautions as part of running this business.”

The market was also hit on Monday by the delisting of fellow blockchain company Animoca Brands, which was removed by the ASX for numerous rule breaches.

“ASX considers that AB1 lacks adequate resources, systems and controls to comply with its obligations under the listing rules,” a statement from the ASX said.