For the first time in the last seven years, shares of Alphabet closed in the red in the bear market territory on Monday at the end of Monday.
At the close of the market and trading on Monday, the price of the stocks of the owner of Google was down 20 per cent compared to the high price it had attained in July this year.
But Alphabet is not only company to have encountered such a situation. There was a drop of anything between 4 and 6 per cent on Monday in the shares of all of the other FAANG shares — Facebook, Apple, Amazon and Netflix. The sudden version to tech st5ocks in recent months has seen tech stocks across the board suffering.
There was a continued fall in the stocks of Facebook on Monday with a drop of 6 per cent, following in on its drop during the end of the last week after a report published in the New York Times where it was alleged that the largest social media platform of the world had engaged in dark PR practices and the firm’s reaction to political scrutiny.
Following a news on Monday morning about the lack of demand for its most recent line of phones which were below of what had been expected by investors and analysts, there was a drop in the shares of Apple. There was also a drop in its share price following a report published in the Wall Street Journal which claimed that the company had cut orders to suppliers for parts for its iPhone XR, iPhone XS and iPhone XS Max models. At teh time of close of the market, Apple stocks were very close to being in the red.
Problems also engulfed Amazon and Netflix.
Warning of a weaker-than-expected holiday season was issued by Amazon last month. That news brought its shares down. There was a drop of 5 per cent in its shares on Monday.
Netflix’s shares have, on the other hand, been sliding since July this year after the company conceded that in the second quarter, about 1 million fewer subscribers than was expected was managed to be added by the company. Despite the company making up some of the losses following encouraging results for the most recent quarter, there has been a continued drop in its stock prices.
According to some analysts, when there is a drop in the entire market, there is a bit taken by the tech shares that are highly valued.
Additionally, an increase in the yield in the long-term bond market also makes the tech stocks vulnerable. Tech companies are also hit by signals from the Federal Reserve about its plans of continuing with its strategy of hiking of rates through till 2019. Tech companies get hit on apprehensions that such a strategy could slow down the economy which could in turn hit the growth of profits of the companies. this has induced some a section of the investors in the companies to pull out and instead invest in the safer assets such as banks and utilities.
(Adapted from Money.CNN.com)