In the last few weeks, stocks for high tech companies have taken such a massive hit that many experts have started to question whether tech stocks were as infallible as previously thought.
It turns out that the Trump administration is doing the tech sector no favors, and that includes the president himself.
THE PERFECT STORM
After reports that Cambridge Analytica in cahoots with Facebook mined data from the American people and used it to swing the 2016 election, Facebook’s stocks took a massive hit. The company’s shares dropped 14 percent, which equals about $75 billion in stock market value, according to the Wall Street Journal.
Facebook’s co-founder Mark Zuckerberg took a personal hit as well as the plunge wiped about $10 billion from his personal fortune, as well.
The tech sector took another hit from someone in the administration, as well, which contributed to the plunge. Last Thursday, President Donald Trump attacked Amazon in one of his most bizarre tweets to date.
I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!
— Donald J. Trump (@realDonaldTrump) March 29, 2018
Partly as a result of Trump’s attack, Amazon lost $61 billion in stock. Additionally, Apple shed $54 billion, Alphabet (parent of Google) lost $62 billion, and Microsoft took a hit of $26 billion, according to Axios.
Investors have been concerned for months that the growing political backlash toward tech companies would lead to higher taxes or more regulations. However, until very recently, there was nothing concrete to pin their fears on.
There was nothing specific, that is, until these past weeks. The fact that Facebook profited by selling the personal information of 50 million users, to then have it used against them psychologically, has sparked outrage around the globe.
“The social media privacy concern which has hit Facebook’s shares now adds to wider worries over US and European regulation in the IT sector,” Steven Wieting, global chief investment strategist at Citi Private Bank, wrote in a note to clients. “Consumer data has become a highly valued commodity and a few IT firms are coming to dominate industries. This raises fear over market competition in certain countries.”
For their part, Wall Street analysts are holding tight to the party line.
For Facebook, 44 out of the 48 analysts still recommend buying the stock, and 48 out of the 51 analysts that cover Amazon still rate it a buy.
Some experts say Facebook is simply too big to fail. However, with the company losing billions in stock, millions of users, and the hashtag #deletefacebook trending, I suppose we will have to wait and see what’s in store, and that holds true for tech stock as a whole.
Feature Image via Pixabay