24/01/2022
Shares of recently listed tech startups including Paytm, Zomato, PolicyBazaar, and Nykaa plunged to their record lows on Monday. Shares of recently listed tech companies have fallen between 20% and 50% in the last week. Let us look at some reasons for the fall.
Reasons for fall in share prices:
The US-based non-finance index, NASDAQ 100, is witnessing a heavy correction. The primary reason being the Tech stocks in the index like Netflix, Amazon, Facebook, Tesla, etc are trading at premium or over-valuation. With the Federal Reserve in the US expected to increase interest rates sooner than expected, investors are withdrawing money from these over-priced stocks, and rotating into companies with more stable cash flows. Software has been among the hardest hit on fears that higher interest rates will continue to eat away at valuations that are based on profits expected to be delivered far into the future. The repercussions of this sell-off in the US are seen in recently listed Indian tech companies.
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