Dismal sales outlooks from LinkedIn Corp and Tableau Software sent their shares crashing hard on Friday, reverberating through the technology sector.
LinkedIn shares plunged as much as 43 percent, wiping out about $11 billion of market value, after the social network for professionals shocked Wall Street with a revenue forecast that fell far short of expectations.
At least seven brokerages downgraded the stock from “buy” to “hold” or their equivalents, saying the company’s lofty valuation was no longer justified.
Tableau Software’s shares were also hit hard and about half its market value evaporated on Friday, a day after its quarterly report and outlook disappointed.
The meltdown in the two stocks was far from contained as investors spooked by the sharp selloff ditched shares of other business services and software firms.
Shares of Splunk Inc, a data analytics software maker, dropped as much as 28 percent.
“The combination of eroding macroeconomic conditions, coupled with increasing investor concerns that high-growth technology companies may witness a sharper deceleration in growth rates than current consensus estimates are factoring in, has pressured multiples across the group,” analysts at Pacific Crest Securities said after lowering their price target on Splunk.
The stock had a forward price-to-earnings ratio of 195.
Shares of enterprise-software firms Salesforce.com and Workday also fell by more than 10 percent each. Salesforce’s 11.8 percent loss was its worst one-day loss since October of 2008.
Other notable stocks that took a big hit included Qlik Technologies, Cornerstone OnDemand, Hortonworks, Teradata, which dropped between 4 and 16 percent. Shares of Amazon.com Inc also fell as much as 6 percent to a low of $501.80.
The technology index was down 2.72 percent, the worst performer of the 10 major S&P 500 industry sectors.