War makes Israeli technology companies lose value; The bet is that the drop will be in the short term

A survey produced by CNN based on information from the website Investing.com, shows that shares of Israeli companies in the technology sector showed a drop of up to 72% in market value, in the month of October alone.

The data is a reflection of the war that the country has been fighting with the radical Islamic group Hamas since October 7, when it suffered a terrorist attack.

According to Renato Ochman, president of the Brazil Israel Chamber of Commerce and Industry, today, the biggest focus is on the situation of startups that were in the process of opening the market.

“Some new companies had to suspend ongoing negotiations. This brings difficulties for these high-tech startups with great potential before October 7th.”, he said.

However, Ochman explains that those companies that raised funds last year or at the beginning of 2023 have momentum and can even hire new employees.

This is because, as the CNN showed, around 360,000 Israelis were called up from the military reserves to present themselves and fight in the war, the vast majority of them being young people between 25 and 30 years old who worked in the country’s technology sector before the confrontation.

It only gets worse in the short term

Still according to data from Investing.com, the devaluation of shares in Israeli technology companies, however, does not follow the performance of the shares throughout the year. An Israeli company in the semiconductor sector, for example, saw its shares drop 23% in October, but in 2023, the company’s shares are up 179%.

Another company in the renewable energy sector saw its shares fall 19% this month. While in 2023 the company’s shares registered an increase of 674%.

The numbers corroborate the analysis of Devora Mason, director of investor relations at Jerusalem Venture Partners (JVP), a venture capital company in Israel.

According to the expert, the devaluation of shares is momentary and in the medium and long term, the technology market in Israel will continue to be an attractive investment.

“I would definitely say this is a good time to enter the technology market in Israel as an investor and strategic partner,” says Mason.

“Many of our companies are present around the world, with teams and offices abroad. These teams can give us a lot of support during these times and, from what I hear, they have been very useful in compensating for some of the downtime, especially during the first week or so after the start of the war”, adds the director who works in Israel for at least 15 years.