Its not often that we can say this… but WAAAX share prices are falling today. Shares in the ASX's most exclusive and lucrative club have made many an investor rich over the last two years (at least on paper), but as Tom Petty told us many years ago, what goes up must come down.
What's happening with WAAAX?
Here's how the WAAAX club are sitting at the time of writing:
- WiseTech Global Ltd (ASX: WTC) shares opened today at $31.40 but are now at $30.28 – a fall of 4.97%
- Appen Ltd (ASX: APX) opened at $30.13 but are now at $28.34 – a fall of 5.72%
- Altium Ltd (ASX: ALU) opened at $35.70 but now sit at $34.46 – a fall of 3.47%
- Afterpay Touch Group Ltd (ASX: APT) opened at $25.65 and now sits at $24.46 – a fall of 4.04%
- Xero Limited (ASX: XRO) shares opened this morning at $65.90 and so far are down the least – $64.99 at the time of writing – a fall of 1.05%
Why are WAAAX stocks falling?
It's likely that WAAAX stocks are following their US-peers in the tech sector. The tech-heavy Nasdaq Index fell 1.32% on Friday (over the weekend in Australia) after renewed concerns over the US–China trade war spooked US investors. Remember, Nasdaq-heavyweight Apple is heavily dependent on China for a huge chunk of its revenue.
With WAAAX stocks prices at very high valuations by conventional standards, any sign of bad news usually leads to a share price haircut. Investors have priced in where they think the WAAAX stocks might be many years down the road. As such, talk of trade wars and global uncertainty is poison for WAAAX stock prices as it changes the long-term outlook that was previously (and optimistically) priced in.
What's next for WAAAX? A Foolish takeaway
Personally, I view stocks like Xero and Wisetech as canaries in the coalmine – they will be the first to drop if things get ugly. In my opinion, the future for WAAAX stocks depends almost entirely on sentiment here. If global trade tensions find a resolution, this will probably be a blip on the radar. But if the trade war starts to bite, I wouldn't want to be caught with my proverbial trousers down with these shares.
