Investors in the world's leading technology stocks, bludgeoned in the latest equity rout, look set to be in for more woes this week.
Apple, Microsoft and Intel opened lower yesterday in New York, after each fell nearly 9 per cent last week.
Shares of China's New York-listed e-commerce giant Alibaba fell 8.9 per cent to US$63.99, well below its IPO price of US$68, making it the second high-profile tech firm to fall below its IPO price this past week after Twitter.
The underwhelming showings of stocks are being seen as a warning to investors enthralled in the hype surrounding mega-IPOs.
More than US$5 trillion (S$7 trillion) has been erased from the value of global equities since China unexpectedly devalued the yuan on Aug 11, fuelling concern that the slowdown in the world's second- largest economy is worse than anticipated.
The benchmark Shanghai Composite index fell more than 8 per cent yesterday, its biggest one-day loss since the 2007 financial crisis.
Technology listings fell more than any other sector except energy on Standard and Poor's 500 index last week, with Apple, Google and Microsoft, the top rung of US tech companies, collectively losing almost US$94 billion in market value. Yesterday, Apple shares slid 5.8 per cent to US$99.61 in pre-market trading and were set to open at their lowest this year. Google opened 5.22 per cent down.
"Apple has a lot of exposure (in China), and they have pinned a lot of their growth to that market and they're going to have to pull those expectations down a bit," FirstHand Capital Management chief investment officer Kevin Landis told CNBC.
Alibaba group missed earnings consensus in each of the last four quarters."A look at its year of activities shows that Alibaba might be a good company in China, but a bad stock," columnist and former investment banker Peter Guy wrote in the South China Morning Post. "With a market cap of US$176 billion, it behaves more like an overpromoted penny stock."
Besides Alibaba, online retailer JD.com, Internet conglomerate Tencent and search engine Baidu command a heavy presence in the top 500 firms in China which are feeling the pinch of its slowdown.
Tech investors see the setbacks to tech stocks as an exposure of the widening gulf between valuations of some private tech firms, known as "unicorns", and the more sombre stock market, the Financial Times said, adding the deepest damage is likely to be felt by companies valued on their growth prospects.
Unicorns are firms worth more than US$1 billion.
Much of the cash that has driven up their values has come from US mutual funds, and "there's no chance that they're not impacted" by the wider retreat in public markets, said Silicon Valley venture capital investor Bill Gurley.
The stock market setback also means many of the unicorns will be forced to accept lower valuations at an IPO than they achieved in their most recent private funding rounds, leaving their investors with paper losses, Mr Gurley said.