Tech sector wipeout sees WiseTech’s Richard White lose $6b in 6 months

WiseTech founder Richard White has lost $6.2 billion over a horror six months for technology stocks caused by rising interest rates and the threat from artificial intelligence.

On Monday, the S&P/ASX Technology Index tumbled 3.2 per cent to take its six-month loss to nearly 50 per cent over a period that has turned former market darlings turn to horrors.

“We’ve got a global growth shock and growth stocks will get hit, the odds are growing for a recession in Australia,” said Damien Klassen, the chief investment officer of Nucleus Wealth. “For WiseTech, there’s corporate governance concerns, but that isn’t new and should’ve been embedded in the share price last year.”

Shares in Mr White’s logistics software business fell 4.8 per cent on Monday to a low of $36.53, taking its six-month fall to 60 per cent and wiping out $18 billion of shareholder wealth.

Mr White’s 115 million shares have fallen in value from $10.4 billion to $4.2 billion. The 71-year-old former rock band roadie turned software entrepreneur insists the Sydney-based business will be a net winner from AI.

On February 27, WiseTech chief executive Zupin Appoo showed his confidence in the business by buying $1 million worth of shares, and has made a paper loss of $200,000 in the month since.

Pro Medicus

Elsewhere, Pro Medicus co-founders Sam Hupert and Anthony Hall have seen their combined shareholdings in the medical imaging business lose $9.4 billion in six months.

Pro Medicus shares dropped 2.6 per cent to $114.60 on Monday and have lost nearly $194-a-share in value since September 30 when they closed at $308.29.

Among other ASX-listed software giants, cloud accounting business Xero lost 3.2 per cent to take its six month fall to 54.1 per cent.

In total, the three homegrown ASX-listed software giants have now seen more than $53 billion in shareholder wealth erased in six months, as investors abandoned a sector that was once considered the share market’s best bet for capital growth.

“Concerns that AI may disrupt parts of the software sector have been in the background for some time and have already weighed on Australian tech names,” said Cliff Mann, the chief investment officer of ETF Shares.

“The bigger issue for markets now is the weaker global economic outlook and for the tech sector specifically, the risk of lower IT spending.”

The broader share market is now heading for its fifth straight week of losses since the Iran war began, with a 0.7 per cent fall to 8461 points on Monday. The flagship index is now off nearly 8 per cent since it closed at 9198 points on February 27.

Mr Mann said he thought the relentless selling across the tech sector meant select software businesses are now good value for investors prepared to bet against the tide.

“We expect the impact of the war to be temporary and see companies with strong moats in their fields, such as WiseTech and Xero, as likely long-term beneficiaries of AI,” he said.

“The recent weakness driven by two negative backdrops of AI disruption and Middle East tension, we think presents an attractive entry point at current valuation levels.”

Canva’s valuation

Mr Klassen suggested the huge sell-off in software businesses listed on public markets had likely spilled across private markets, where the $60 billion valuation of Sydney-based graphic design business Canva is now under the spotlight. Co-founders and married couple Melanie Perkins and Cliff Obrecht were last estimated to be worth $18.5 billion, topping the Young Rich List.

“But, I find it hard to believe Canva’s valuation is not lower,” Mr Klassen said.

“Canva’s got great software but it’s in the unfortunate position where if someone wants something designed now, I don’t think they care if AI designed it or not, as long as the end output is what they wanted.”

Canva’s local venture capital investors, including Airtree Ventures and Blackbird have publicly insisted it’s unaffected by the broad decline in technology valuations.