It’s been a bad day for small- and mid-cap tech stocks. BlackBerry, Roku, GoPro, and Shopify have lost significant market value today. Meanwhile, tech ETFs XLK, SMH, and SOXX have returned -1%, -1.5% and -1.7% respectively.
BlackBerry leads market sell-off
BlackBerry shares are down close to 20% after the company announced its earnings results for the second quarter of fiscal 2020 earlier today. Though BlackBerry’s earnings came in higher than estimates, they missed Wall Street revenue expectations.
BlackBerry’s revised outlook for fiscal 2020 didn’t help either. The stock is down to a four-year low.
Roku keeps getting pummeled
Shares of online streaming device company Roku (ROKU) have fallen close to 6% today. Roku stock has now fallen over 42% since the start of this month. Investors are concerned about growing competition in the streaming device space.
Roku was already competing with Apple, Amazon, and Google. Now, Comcast (CMCSA) and Facebook (FB) are also looking to enter this segment. Will Roku be able to maintain its market share in the streaming device vertical? Or will it go the Fitbit route and destroy investor wealth?
Roku remains an attractive acquisition target, given its market reach. The company is now looking to expand into international markets—which will be a key revenue driver. But Roku is still unprofitable. It also has to limit its expenditure on sales and marketing, which tech giants don’t have to worry about.
Despite losing close to 50% of its market cap in September 2019, Roku stock is up 214% year-to-date. This staggering rise might also mean Roku will trade lower in a market sell-off.
GoPro stock down 5.5% today
Shares of consumer technology company GoPro (GPRO) are down 5.5% today. There’s no significant news surrounding the company, but the stock has gained just 3.2% year-to-date. GoPro has lost a whopping 41% since May.
Similar to BlackBerry, GoPro has also burnt significant investor wealth over the years. The stock has lost 95% in market cap since October 2014. GoPro has tried to introduce several products across price points to drive revenue growth higher. However, action cameras aren’t like smartphones. They’re a niche product with a high upgrade cycle. GoPro is expected to struggle with revenue growth and profitability going forward.
Shopify has fallen 6.3%
Alongside BlackBerry, fellow Canadian company Shopify (SHOP) has fallen 5.2% today. The stock has now fallen for eight consecutive days. It’s trading 28% below its 52-week high. Similar to Roku, Shopify has also had a rampant upward spiral in 2019, gaining 114% year-to-date despite the recent pullback.
While Shopify shares have been trading at a premium, the stock’s sell-off was also driven by its recent second offering of $600 million last week. The offering was priced at $317.5 per share. Shopify also pumped in $450 million to acquire 6 River Systems earlier this month.
Should you buy BlackBerry, Roku, and Shopify?
While BlackBerry, Roku, and Shopify are trading well below their 52-week highs, they might continue to experience volatility. The Dow Jones Industrial Average Index and the S&P 500 Index are trading close to all-time highs.
A broader-market sell-off should drive BlackBerry and other stocks significantly lower. I think investors should be cautious. Other high-growth tech stocks that have corrected significantly today include Lyft, iRobot, The Trade Desk, and Datadog (DDOG). They’ve fallen 4.8%, 4.5%, 4.3%, and 4.1%, respectively.