Microcap tech-stocks enjoying a double-digit kicker following Nasdaq rally

By Market Index
Wed 19 Oct 22, 2:50pm (AEST)
Source: iStock

Key Points

  • Some ASX-listed microcaps tech stocks were up over 10%
  • The ASX 200 information technology index is down -37.25% over 12 months
  • Novonix entered a trading halt ahead of news of a "material funding arrangement"

A select handful of tech stocks appear to have bathed in a strong updraft courtesy of a bounce on the Nasdaq, up 546.95 points, or 5.3% which rallied on revelations that Netflix had added more than twice as many new subscribers as expected in the last quarter.

While the ASX 200 information technology index (INDEXASX: XIJ) closed 4.19% higher yesterday, the past 12 months have not been kind to the index, down -37.25%.

On a year-to-date (YTD) basis, the benchmark index has dropped -33.32%.

Investors should note that high-growth stocks in the tech sector, especially those with negative earnings (aka long duration stocks), have been key casualties of higher interest rates.

Microstocks on a tear today

Despite the sector at large trading relatively flat, some microstocks within the tech sector captured the market’s imagination today with double-digit share price growth at noon.

ASX-listed microcaps tech stocks up over 10% today included:

Tech stocks at the larger end of the sector also benefitted from the Nasdaq-inspired uptick today:

Novonix enters trading halt

After jumping 19% on Tuesday, seemingly on radio silence, battery technology and materials company and S&P/ASX300 stock Novonix (ASX: NVX) entered a trading halt today ahead of news of a "material funding arrangement".

Revelations of a pending capital raising follow a red flag being raised by auditors over "material uncertainty" of the company's ability to finance its ongoing growth.

The tech company’s share price is down -64% over 12 months after posting a -$71m loss and -$40m of cash outflows for FY22.

News from Novonix has been minimal since US-based diversified energy manufacturing and logistics company, Phillips 66 (NYSE: PSX) became a major investor in the company in September of 2021, when it acquired a 16% stake in the business.

Early September, Morgans retained a Hold rating on Novonix (target price $2.11) after concluding the company lacked stock-specific catalysts.

Large increases in operating costs resulted in the company posting a significantly higher FY22 net loss.

At the full year FY22 return on equity (ROE) and return on capital employed (ROCE) were both north of -20%.

Free cash flow (ex-dividends) was -$155.8m.

Novonix share price over 12 months.


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