On Wednesday, November 10, 2021, the Rivian R1T electric pickup truck will be listed off the New York NASDAQ market website.
Soldier | Bloomberg | Getty Images
Due to the decline in the Nasdaq index, which is dominated by technology stocks, some of the hottest technology IPOs this year, including Rivian, Affirm and Roblox, plunged in the market on Monday. At the same time, the S&P 500 Index and the Dow Jones Industrial Average remain optimistic, indicating that investors are exiting the technology industry.
Although there is no clear reason for the sell-off, the stocks that have risen the most this year are feeling the pressure. Affirm’s stock price rose rapidly after establishing a new partnership with Amazon, and fell 7% in the afternoon trading. Roblox, which benefited from rising interest in Metaverse, fell by about 9%.
The sell-off of electric car maker Rivian continued on Monday. The company’s valuation after listing is ahead of Ford and General Motors and is expected to compete with Tesla. As investors continued to take profits, its stock price fell by more than 12%.
Fear of rising interest rates may be a reason for the sell-off, which usually means that investors’ expected earnings growth will decline. However, President Joe Biden nominated Fed Chairman Jerome Powell on Monday for a second term. It is expected that the Fed will not raise interest rates for the first time until the summer of 2022 at the earliest.
In the case of possible interest rate hikes, Goldman Sachs analysts in a report on November 19 urged portfolio managers to pay attention to “currently higher profitability growth stocks” and avoid fast-growing stocks that fully value long-term growth expectations. company.
The analyst wrote: “Our recommendation is to avoid fast-growing companies that are completely focused on long-term growth expectations because they are more susceptible to the risk of rising interest rates or disappointing revenue.” “In contrast, the current profitability is higher. Of growth stocks have relatively short durations and are therefore less affected by the risk of rising interest rates.”
Some of these technology companies with high profitability and rapid expected revenue growth include Palantir, Zoom, Meta, and Alphabet.
Some of the largest IPOs in 2020 are also feeling the pressure. On Monday afternoon, Asana plunged nearly 20%, and DoorDash and Airbnb both fell 7%.
The rotation of technology stocks earlier this year hit cloud stocks such as Fastly and Snowflake hard, as investors turned to financial and commodity stocks that usually perform well in times of inflation. On Monday, the two stocks fell about 5% and 7%, respectively.
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