A difficult end to the trading week was sparked by a sharp sell-off in tech stocks on the Nasdaq, compounded by growth concerns out of Netflix. While there were some winners amid the mix, a number of ASX names reset yearly lows on the back of disappointing trading updates.

 

Which shares excelled?

Making it three from three, microchip developer Brainchip (ASX: BRN) was again the standout stock this week, with positive momentum sending the stock soaring before the market-wide sell-off pared slashed gains. Already one of the most-discussed stocks across the local market, the company set tongues wagging this week when it announced that it has been issued a US patent for Event-based Classification of Features in a Reconfigurable and Temporarily Coded Convolutional Spiking Neural Network. 

In more simple terms, the patent protects Brainchip’s neuromorphic processor configured to perform convolutions on digital input data that has been converted into spikes. The rumour mill was also in overdrive, as a number of investors speculate about the possibility Brainchip’s hardware could make its way into end-use developments of other high-profile companies following news Mercedes-Benz will use an Akida microchip in its Vision EQXX concept car.

Elsewhere, wealth management platform Hub24 (ASX: HUB) delighted shareholders, with the stock bouncing on a positive quarterly update. Thanks to record net inflows of $3.6 billion, total funds under administration reached $68.3 billion at the end of December. That is 118% higher than a year ago, and sparked by the integration of Xplore wealth and 28 new distribution agreements signed during the quarter.

Gold miner De Grey Mining (ASX: DEG) is another name that burst to life this week, and it wasn’t the only name from the gold industry that put on a positive showing. Although no price-sensitive news was released to attribute to the rally, the stock broke through a technical resistance level that may have prompted more traders to pour into the stock and fuel the gains.

IT services and solutions provider Data#3 (ASX: DTL) was also among the names that gave a preview of its earnings. It expects consolidated net profit before tax (NPBT) for the first half of FY22 to be slightly ahead of the top-end of the guidance it provided at its AGM in October, when it forecast $15 million to $18 million in profit.

It was a similar story for electronics retailer JB Hi-Fi (ASX: JBH), which reported a robust set of numbers that bolstered shareholders confidence. Both the Australian division of the company, and the Good Guys division delivered low-single-digit sales growth versus a year ago, which itself was significantly higher than pre-pandemic figures. That reversed the trend from the September quarter, when sales growth turned negative.

Other winning names this week included a number of players from the gold sector, including Silver Lake Resources (ASX: SLR), Northern Star Resources (ASX: NST) and Gold Road Resources (ASX: GOR).

 

 

Which shares dragged on the market?

On Wednesday, Megaport (ASX: MP1) shares came tumbling down following the release of its second-quarter earnings report. Disappointingly for shareholders, the interconnection services provider saw revenue increase just 7% quarter-on-quarter. Customer numbers and total ports only rose by 5% each, pointing to slowing growth across the business. Combined with a tech sell-off during the week, shares in MP1 were up against it and never really recovered.

Once a market darling, the share price of Redbubble (ASX: RBL) plunged to a new yearly low this week. Competition is beginning to take its toll on the ecommerce marketplace portal, with marketplace revenue down 18% for the December half and its gross transaction value (GTV) slumping 14% versus the prior corresponding period. Margins have seen a major squeeze, resulting in EBITDA diving 84% to $8 million. With forward revenue and EBITDA guidance also downgraded, the stock imploded.

Also struggling this week was another ecommerce retailer in Kogan (ASX: KGN). Much like Redbubble, the stock also reset its 52-week low, with the downtrend in place for some time now. There was no specific news out of the company that weighed on the stock, but more broadly, one of Kogan’s rivals, Wesfarmer-owned Catch, reported that its gross transaction value increased by just 1% in the first half of the year. Although some might be inclined to believe a competitor’s dour performance could be a positive for Kogan, investors clearly remain concerned it could be a sector-wide issue.

Friday’s sell-off hit battery metals stocks particularly hard, with investors cutting exposure to some of these growth names on the back of a shift in market sentiment. AVZ Minerals (ASX: AVZ) copped the worst of it, but Allkem (ASX: AKE), Novonix (ASX: NVX), Ioneer (ASX: INR), Piedmont Lithium (ASX: PLL) and Lynas Rare Earths (ASX: LYC)  weren’t spared the carnage.

And finally, recent trading updates from Zip (ASX: Z1P), which pointed to increasing bad debts, and Nuix (ASX: NXL), which showcased lacklustre growth, weighed on each company’s share price. Both stocks were on the retreat and set 52-week lows.

 

We’ll be back next week with another Weekly ASX Trading Wrap Up – until then, have a great week!

 

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