Let’s Get Technical

Today Australian investors and geeks banded together to express their disappointment with the somewhat expected announcement from Atlassian about at a USA IPO listing. Atlassian is considered one of the great tech fairy tales for Australia and its founders Mike Cannon-Brookes and Scott Farquhar are used as poster boys for the Australian start up scene. This leads to the all-important question? Why don’t you ASX boys?

The common answer to this is the lack of funding for the industry spawned from the lack of understanding from Australian investors to funding tech companies. Whether we agree with the assessment is neither here nor there, the consensus among innovative Australian companies is to move off shore, Shoes of Prey is another one.

But what about us tech hungry investors? Well here is the other high profile players in the industry.

MYOB (Unfortunately, we could not get stock quote ASX:MYO this time.) specialises in accounting software and listed earlier this year. Its footprint is firmly in Australia and New Zealand which is seeing it exposed by global players coming into the market. The opening days was exciting for MYOB as it went to the market at $3.91 after the original IPO price was $3.65. However it’s been downhill from there. Currently trading at $3.48 this is a risky option as growth is depending on it nailing the niche of the Australia/New Zealand market.

Another player in this space is Xero (Unfortunately, we could not get stock quote ASX:XRO this time.). Founded in New Zealand us here in Australia will claim this company like we do Russel “Rusty” Crowe and Mr Nicole Kidman (AKA Keith Urban). The reason why this company rates here is its growth plans to take on the UK and like the two men listed above USA. The market opportunity is huge so it presents a lot more upside to MYOB but as MYOB point out, it’s not an easy task taming the beast that is the USA. Just last year this mob was priced over $40, now at $14.05 suggests a discounted price.

A veteran of the internet business scene, started not too long before Atlassian is Seek (Unfortunately, we could not get stock quote ASX:SEK this time.). Yeah the site you visit as you sit at work, desperately hoping to find your exit ticket. The sites good, a market leader and dominates the Australian market. Now with sights set on expanding abroad including the golden goose that is China. Like much of the market Seek has fallen from a peak in February this year of $18.99 to $12.27 at close of trade today. Early indications show good growth internationally, definitely a company to watch.

One of the cutting edge potential game changing companies is Freelancer (Unfortunately, we could not get stock quote ASX:FLN this time.). The online marketplace connects businesses (and individuals) to trained experts of their field including coders, graphic designers and app developers. The business is still in potential stage but could follow suit of airbnb or UBER in disrupting the industry. It is a go to for start-ups and lazy corporates (just don’t tell their boss!) however is yet to deliver dividends. It is getting back towards the price that it opened to less than a year ago, and has settled after the recent capital raising currently trading at $1.445. Potential is there however it does come with some risk, this could fit into the ‘speculative’ bucket of your portfolio nicely.

The common trend among the above tech giants is that they have taken a significant hit along with the rest of the market. This may have influenced the decision of Atlassian to go offshore to list, but market conditions there will be equally testing. I suspect the decision is much about publicity of their company as much as raising capital. We can continue to complain about the lack of technology companies in Australia, or invest in them. The latter will prove difficult for some, but those that invested in Seek at the start would have capital gains of around 300% plus dividends along the way.