Global tech stocks plunge as SpaceX comes back down to earth
Global tech stocks have been rocked by a widespread sell-off today after investors dumped shares in SpaceX and triggered a rout across markets.
Asian markets sank overnight, with South Korea’s Kospi falling 8.3 per cent leading to the stock exchange forcing a trading-halt as investors dashed to sell-off their chip exposure.
Much of this stemmed from falls on Wall Street, analysts said, where the Nasdaq was down one per cent after a bruising session yesterday in which billions was wiped from the value of SpaceX and other tech stocks.
“SpaceX can be fairly blamed as the culprit,” Chris Beauchamp, chief market analyst at IG, told Morning Wire said.
Elon Musk’s rocket maker plunged 16 per cent to $154 on the announcement of a major bond issue it said would help fund its AI plans. The drop marks a major haircut from its peak of $201 just a week ago, when it climbed 25 per cent in the days following its IPO in New York.
The firm is hoping to raise at least $20bn (£15.1b) from the offering, which will be used to refinance its bridge loan – a short-term loan used to cover imminent expenses until a company can secure permanent long-term financing.
Musk himself has been hit with the biggest ever loss of personal wealth following the stock plummet, with his net worth sinking by $350bn. The world’s richest man’s net worth fell to $1.1tn, from $1.45tn following SpaceX’s stock loss, according to calculations by Forbes.
This decline alone is worth more than that of the world’s second-richest man, Larry Page, whose net worth stands at just shy of $300bn.
SpaceX sell-off travels to UK
“The selling in SpaceX, as its trajectory starts to reverse following a blockbuster market debut, has had a knock-on effect on some of the UK vehicles with stakes in the business,” said AJ Bell investment director Russ Mould.
Shares in Scottish Mortgage Investment Trust – whose stake in the rocket maker makes up around a fifth of its £16bn fund – were down four per cent by midday to 1,381.62p.
Baillie Gifford’s US Growth Trust was also down three per cent to 321.78. SpaceX is understood to make up around 15 per cent of the investment trust’s portfolio.
The FTSE 100 was also trading down 0.4 per cent to 10,391.72p by midday, led by a fall in miners with Antofagasta down nearly seven per cent and Anglo American and Fresnillo 5.5 per cent.
“[The blue-chip index] has fallen victim to a broader global retreat in equities as the previous high flyers get hit hard,” Beauchamp said.
Still, it managed to undershoot some of the bigger losses in continental Europe. The Cac 40 in Paris was down 0.7 per cent, Germany’s Dax 1.1 per cent and Amsterdam’s AEX 1.4 per cent.
London hosts a smaller tech variety than the majority of its peers, with the FTSE 100 only more recently building up its exposure with the addition of Computacenter in the latest reshuffle.
But Sage – one of the City’s biggest tech firms – was up 1.5 per cent to 814.40, helping to pull the sector’s performance above the majority of its counterparts.