fb-pixel Skip to main content

Boston’s tech stocks decimated by post-lockdown economy

Toast, Wayfair, and other darlings of last year’s market have crashed.

Traders on the floor of the New York Stock Exchange on Monday.Spencer Platt/Getty

Call it the $150 billion tech wipeout. That’s how much market value the 10 biggest Boston-area tech stocks have lost since they peaked last fall.

The entire stock market has had a rough ride this year, as rising interest rates, supply chain shortages, and higher inflation sapped investor confidence. But tech stock prices are not only sensitive to higher interest rates — they’re also feeling a hangover from the end of pandemic lockdowns.

Take one of the standout tech companies that went public last year, Toast. The pandemic forced thousands of restaurants to bolster their take-out offerings, and Toast seemed to have the perfect products. The Boston restaurant payments firm went public at $40 a share in September and quickly climbed to almost $70, giving the company a market value of $40 billion.


But rising interest rates and inflation focus investors more on profits today and less on the promise of future growth. So in February, when Toast reported its annual revenue had more than doubled but its net loss had also almost doubled, investors fled. On Tuesday, the shares closed at $18.51 with a market value of under $10 billion.

More seasoned tech companies also got hit. HubSpot, the Boston area’s most valuable software company, gained market share in the tough customer relationship management field during the pandemic. Its shares hit $866 in November, giving it a market value of $40 billion. Since then the shares have plummeted and closed at $370.50 Tuesday, with a market value of about $18 billion.

Some have had an even steeper rise and fall. Boston online furniture retailer Wayfair was seen as one of the big winners from the lockdown, as people stuck at home shopped to upgrade their cribs. But this year, consumer spending has shifted to travel and eating out. At the same time, shortages have delayed furniture deliveries. Wayfair’s stock peaked at almost $340 last June, faded to $276 in November, and closed at $89.85 Tuesday. Its market value has dropped from $35 billion to $9.4 billion.


“Investors are struggling with what a new normal is for these businesses,” said Brian Colello, technology sector director at Morningstar. “These businesses clearly did well one to two years ago, but now they’re going to face incredibly tough comparisons because you’re comparing against a once in a lifetime, pandemic cycle.”

One other factor beyond the pandemic and interest rates? Tech stocks never should have been priced so high to begin with, T. Rowe Price capital markets strategist Tim Murray said.

“The overriding issue is just that they were kind of unreasonably expensive,” he said.

Part of the reason was that less experienced investors, perhaps including those using brokerage apps like Robinhood, piled into whatever stocks were rising fastest, Murray explained. “Once that fizzled out and they started to go down, there weren’t other buyers to set a floor for these stocks,” he said.

Eventually, stock prices will reach a low enough level to entice more experienced bargain-hunting investors. But we’re probably not there yet.

Aaron Pressman can be reached at aaron.pressman@globe.com. Follow him on Twitter @ampressman.