US Tech Stocks To Fall Further?

US Tech Stocks To Fall Further?

over 3 years ago2 mins

Mentioned in story

Another activist investor claimed on Tuesday that X-ray maker Nano-X Imaging looked like the next Nikola, fracturing the company’s share price – but according to investment bank Morgan Stanley, American tech stocks in general could be in for further falls 😟

What does this mean?

Nano-X claims to have developed groundbreaking portable (and affordable) digital X-ray technology. It “went public” a month ago, selling $165 million worth of shares to US investors in an initial public offering despite lacking regulatory approval for its diagnostic devices – or anything approaching a profit.

The company’s newly-public stock subsequently tripled in price – until last week, when short-selling specialist Citron Research published a characteristically acerbic report. According to Citron, Nano-X also lacks real customers, a working prototype, or indeed any hard evidence for its disruption of a highly competitive market – earning it the moniker “Theranos 2.0”.

Source: Citron Research
Source: Citron Research

Then, on Tuesday, Nano-X was subjected to the penetrating gaze of Muddy Waters. The influential activist prefers to use recently criticized electric truck maker Nikola – whose founder left the firm on Monday – as a comparison, pointing to both companies’ penchant for dodgy demo videos and borrowed respectability, as well as over-cozy investors. Nano-X’s US-listed stock has now fallen over 55% in mere days 📉

Why should I care?

Other investors have paid increasing attention to these short-sellers’ research recently – but not everyone agrees with their analyses. Citron reports from the past year have so far proved well off the mark in their predictions for Peloton and Sonos’s share prices, and Nano-X’s stock remains comfortably above Citron’s $0 “target”; it may yet come back with a robust rebuttal.

Indeed, any further declines could owe much to trends in the wider US stock market. Adding to a chorus of investor pessimism on Monday was the Morgan Stanley analyst who predicted the tech-heavy Nasdaq index’s 13% drop this month. With short-selling positions at a 12-year high, he reckons such stocks could have another 12% to fall before stabilizing.

Article Image

Even if the Nasdaq does enter a “bear market”, however, it’ll likely remain above its starting level for the year – thanks in part to hedge funds’ apparent commitment to big Internet stocks. That may leave the Nasdaq’s performance in 2020 looking better than the S&P 500’s. The latter index is exposed to a broader range of industries, meaning it’s less influenced by tech selloffs – but also less influenced by their gains 🤷‍♂️

Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG