Technology stocks suffered a comprehensive blow to the US stock market in 2022. The downward trend is particularly evident for companies that first listed in 2021. Among the 53 technology related companies tracked by CNBC through IPO or direct listing last year, except 3, the current trading prices of other companies are lower than their offering price (IPO) or opening price (direct listing).
More than half of the companies have fallen by at least 50%. This includes some of the most compelling names, such as trading applications coinbase and Robinhood, electric vehicle manufacturer rivian, cloud software provider uipath and financial technology companies marqeta and toast. They lost more than 60% of their value.
The sell-off began at the end of last year as soaring inflation and concerns about rising interest rates squeezed investors out of risky assets with the highest multiples. After the conflict between Russia and Ukraine, the decline intensified in February. After the market digested the comments of the Federal Reserve and the increase of the benchmark interest rate by half a percentage point, it was close to the area of panic selling late last week.
The NASDAQ fell 4.3% on Monday to its lowest level since November 2020. On Friday, the technology city index closed down for the fifth consecutive week, the longest consecutive decline since 2012.
Companies that intend to go public in the first half of 2022 are not interested in continuing this path. This is because most of them have made venture financing with valuations that reflect market conditions over the past few years, as the technology industry is at the end of a decade of gains. Going public today will require a comprehensive reassessment of their business and enable many late stage investors and employees to hold stocks outside the price.
Instacart, a grocery distributor, is the only company of its kind to be publicly impacted. In March, the company said it had reduced its valuation by about 40 per cent to $24 billion, allowing instacart to tell employees and new employees that upcoming stock awards would be offered at a lower price.