In the last couple of years, Australia’s major tech stocks have witnessed a stunning rise that has dwarfed US tech stocks.

The WAAAX stocks of Wisetech (ASX:WTC), Afterpay (ASX:APT), Altium (ASX:ALU), Appen (ASX:APN) and Xero (ASX:XRO) have outshone the FAANG stocks of Facebook, Apple, Amazon, Netflix and Google.

In the last year, the FAANG stocks have gained an average of only 2 percent and 68 percent in the last two years. But WAAAX stocks have gained an average of 93 percent in the last year and 508 percent in the last two years.

Code Name Price  

(11 March 2019)

Market Cap ($US) 1 year Return 2 Year Return (%)
GOOG Alphabet $1,179.26 $807.2B 1.4% 39.0%
AMZN Amazon $1,625.95 $819.8B 4.5% 96.0%
AAPL Apple $172.50 $822.9B -0.6% 28.7%
FB Facebook $169.13 $492.3B -6.5% 24.0%
NFLX Netflix $352.60 $157.0B 11.7% 154.7%
Average 2.1% 68.48%

 

Code Name Price            (11 March 2019) Market Cap ($A) 1 year Return (%) 2 Year Return (%)
APT Afterpay $20.20 $4.5B 148.2% 778
ALU Altium $32.77 $4.3B 66.5% 363.11
APN Appen $24.37 $2.6B 161.1% 926.94
WTC WiseTech $19.99 $6.2B 103.0% 289.07
XRO Xero $48.44 $6.9B 54.2% 185.94
Average 93.0% 508.61%

* Numbers correct as of March 12. 2019

The WAAAX stocks are worth a collective AU$24.5 billion – less than 1 percent of the FAANG stocks which are worth over US$3 trillion combined.

But in percentage terms they have done several times better in spite of dealing with similar market conditions to the US.

Young…and Kiwi?

What makes the performance of WAAAX stocks more staggering is that they are all relatively young with all but one stock listing this decade.

They have all delivered generous returns to their shareholders since listing.

Ticker Name Date of ASX Listing Initial Price Price (11 March 2019) Return
APT Afterpay 4 May 2016 $1 $20.20 1,926%
ALU Altium 13 Aug 1999 $3.46 $32.77 847%
APN Appen 7 Jan 2015 $0.50 $24.37 4,774%
WTC WiseTech 11 Apr 2016 $3.35 $19.99 497%
XRO Xero 8 Nov 2012 $4.65 $48.44 941%
Average $2 $29.15 1,797%

 

One of these stocks, Xero (ASX:XRO) actually began on the New Zealand Stock Exchange (NZX) back in 2007 – listing at NZ$1 per share. In 2012 they became dual listed, entering the Australian Securities Exchange (ASX) at $4.65 per share.

At the time of listing on the ASX, Xero declared it to be, ‘a huge milestone for the company’ and recognised how important Australia is to the company’s aspirations.’

Last year, to the ire of Kiwi investors, Xero delisted from the NZX and became solely listed in Australia.

Founder Rod Drury said that “while more than half of Xero’s people live and work in New Zealand, 80 percent of our revenue now comes from outside New Zealand.”

It says its strategy is to drive further growth in markets like UK, North America and Southeast Asia.

The stand performer is is Altium (ASX: ALU) that listed back in 1999. It actually fell by 98 percent in its first 13 years of being a public company from $5.60 at the turn of the century to 8.5 cents in June 2011. But since then, to say its performance is staggering would be an understatement. 

Altium share price since 1999

Title Altium Share Price

 

 

 

 

 

 

 

 

Chart courtesy of Bloomberg.

Why the success?

 

All these businesses have been able to scale up from the start up phase into global multinational companies with millions of customers.

They have retained local roots while operating in multiple countries and continued to grow beyond levels that many shareholders would be content with.

Unlike the dot com bubble tech companies, they have become self-sustainable.

Many Australian investors and technology investors may still envy Silicon Valley’s tech sector but the success of the WAAAX stocks is a testament to the home-grown tech sector.

The WAAAX stocks may still lack the iconic status of their larger FAANG counterparts –  but they are outperforming them in terms of shareholder returns – and isn’t that what all investors are seeking?

 

This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.