The S&P/ASX200 Index (ASX: XJO) is flat on Tuesday afternoon, sitting 0.1 points lower at 6190.4.
The technology sector is seeing widespread losses, with these 4 ASX tech shares all in the red.
The Appen Ltd (ASX: APX) share price has dropped 2.15% to $23.25. The company had recently announced a A$285 million placement at an offer price of A$21.50 per new share. When companies complete a cash raise, the share price will often fall to a level near the offer price and typically takes a short period of time to recover (given the cash raise is for growth and not for keeping the company alive). The Appen share price has bounced off lows and is a prime example of the stock needing more time before heading north.
The Altium Limited (ASX: ALU) share price has fallen 2.49% to $33.33 on no news. The company had previously hit 52-week highs on the back of a spectacular HY19 result. Altium and other strong earnings ASX tech stocks have received a lot of market love but currently looking very 'toppy'. Investors should be careful at these levels as money can exit as fast as it entered the stock. A prime example of this is by looking at Altium's share price in late August 2018 when it released full-year results. The share price soared some 35% in two days before crashing 30%.
The Afterpay Touch Group Ltd (ASX: APT) share price is down 0.49% to $20.50 despite no news out of the company. The Afterpay share price is up an extraordinary 65% in 2019 and no doubt subject to some degree of profit taking. The recent drama surrounding the valuation of Splitit Ltd (ASX: SPT) may also contribute to a weaker sentiment for Afterpay shares.
The Megaport Ltd (ASX: MP1) share price has also struggled in recent times following a $50 million placement with new shares issued at $4.00. The share price is currently trading at $4.05 down from weekly highs of $4.50. This is another example of a fundamentally strong company that needs more time.
Foolish Takeaway
The market is demonstrating some top like action, in my opinion – especially with the ASX200 capped at the 6200 levels. While the ASX tech shares above are all high-quality in terms of growth potential and sector, I believe more patience is needed to present investors with a better risk/reward setting.
