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Bulls, bears and unicorns

January 29th 2016

A glance through the roller coaster prices of various technology business makes interesting reading.  The background to all this is the resurgence of the bear market – since early December the FTSE 100 has fallen from 6400 to 5600 and is now (late January) back around 6000.  That’s a net movement of around 6%.  The NASDAQ has moved from 4700 to 4200, so that’s around a 10% decline.  .

Starting with the biggest company of them all, Apple, things don’t look quite so good.  $120 in December has deteriorated to $93 (22% down) as investors did not seem to realise that the iphone replacement train was bound to run out of steam at some point.  But it’s not alone – professional networking group LinkedIn also suffered a 20% fall.

But these pale into insignificance when you look at others.  GoPro, having already fallen from its frenzied heights throughout 2015 has seen a 47% fall in the last 2 months.  Fitbit also fell 46%.  Uber and Airbnb have delayed their IPO’s as they don’t seem to want a repeat of the King Digital scenario.

So who are the winners?  Facebook initially went down 10% over the same period but is now back up to it’s early December price.  Microsoft had only a marginal decline, similar to Amazon and both of these were due to slightly reduced profits on the back of dollar exchange movements.

But the biggest winner might just be those involved in the King Digital episode.  After the first day tumbles, the share price continued to fall and eventually hit $12.  But late last year it starting rising and is now back at $18.  Those that bought at $18 and kept their nerve have lost nothing and look good in the current volatile market.  Those that came in at $12 must be believing that they found a real unicorn (any new tech company with >$1bn value) amongst the bulls and the bears.

But that’s the trouble with unicorns – so many of them die off or just transform back into donkeys.

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