NZ tech stocks slide on Meta's mega miss

New Zealand's main share index fell with global equities as shares in Facebook owner Meta dropped 25% and central banks in Europe started tightening monetary policy.

Friday, February 4th 2022, 6:38PM

by BusinessDesk

The S&P/NZX 50 Index fell 56 points, or 0.5%, to 12,279.56. Turnover was $117 million.

In Europe, the Bank of England hiked its benchmark policy rate by 25-basis points, and four of the nine committee members voted for a 50-basis point hike.

The European Central Bank held its rate unchanged but kept the door open for possible rate hikes this year – something it had previously classified as unlikely.

If that wasn’t enough to kill investor sentiment, the key indices in the United States each tumbled approximately 3% after Meta – aka Facebook – reported a decline in active users for the first time.

BNZ strategist Nick Smyth said Meta was so large its 25% share price drop was responsible for roughly a third of the S&P 500’s decline and half the Nasdaq’s fall all on its own.

Technology stocks with US exposure lead the local index lower: Eroad dropped 4.2% to $4.31 and Pushpay Holdings fell 2.7% to $1.09.

Some smaller tech stocks outside the index fell as well: Trade Window was down 2.5% at $2.32 and IkeGPS declined 4.9% to 78 cents.

Shares in Serko and Vista Group both bounced – having been sold aggressively already – and both climbed about 1% to $5.20 and $2.15, respectively.

Jarden analyst Guy Hooper said Serko’s share price reflected “an optimistic view of execution on offshore growth given the early stage”.

He also said any missteps or a further delay to recovery in business travel could force it to do another capital raise, diluting existing investors.

Meridian Energy had the index’s largest gain, up 2.8% at $4.79. The electricity generator will report its earnings on Feb 23.

Jarden analysts this week said the electricity sector was expected to have positive earnings results and the stocks in the sector were “almost equally undervalued”.

“The sector remains cheap in our view with ratings unchanged; Contact a ‘buy’, and Mercury, Meridian and Genesis at ‘overweight’,” they wrote.

National carrier Air NZ also continued to rally on the border reopening plan, it rose 1.9% to $1.59 today.

UBS analysts give the stock a 75-cent target price, only just below Jarden’s 80-cents. Forsyth Barr has the most positive view, but still only gives a $1.10 target.

Shares in Briscoe Group jumped 5.3% to $6.10 after it beat its annual profit forecast by $2m.

Managing director Rod Duke said the retailer had an “outstanding” final quarter and included nine days of store closures due to the Auckland lockdown.

Rua Bioscience share rose 1.1% to 46 cents after it announced pharmaceutical company Dr Reddy's Laboratories would buy one of its key customers, a German medicinal cannabis distributor called Nimbus Health.

Rob Mitchell, Rua’s chief executive, said this will allow Nimbus to expand its operations and ultimately lead to greater reach for Rua products into the German market.

The NZ dollar was trading at 66.72 US cents at 3pm in Wellington, up from 66.19 cents yesterday.

Tags: Market Close