Tech darlings lose their lustre as investors flee

ASX's listed tech darlings were pummelled on Monday with Afterpay tumbling almost 30 per cent.

The ASX's listed tech darlings, the “WAAAX” stocks, were pummelled on Monday with Afterpay tumbling almost 30 per cent and the tech index slumping by more than 10 per cent.

Buy now, pay later provider Afterpay, which had hit an all-time high of $41.14 just over a month ago, closed down 28.46 per cent to $8.90. Its tumbling share price last week forced its co-founders to issue a letter to calm shareholders, but its price continued to fall.

Fellow tech stock WiseTech fared better, falling almost 10 per cent before bouncing back to close the day up 1.69 per cent to $12. That's down from $29.44 a month ago.

Electronics software maker Altium meanwhile closed down 6 per cent to $24.67 and Appen was down 5.57 per cent to $17.45.

New Zealand-based accounting software outfit Xero slipped 4.9 per cent to $58.75.

The co-founder of investment outfit Bailador, Paul Wilson, told The Australian that investors should be looking for quality ASX-listed businesses that had fundamentals in place to survive the epidemic.

“In situations such as we are currently in, there is certainly an element of ‘sell everything’ from some investors," he said. “That creates buying opportunities if you can focus on quality businesses that are likely to weather the storm.”

He added that subscription businesses in particular should stave off a downturn better than businesses with more traditional business models.

“We are seeing transaction activity drop off hugely. But for subscription businesses, the impact is more likely to be delayed growth, rather than significant revenue drops,’’ he said. “If a subscription business is well-funded and not burning cash, then the decision point becomes more about how long growth is likely to be disrupted.’’

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