May 22, 2022

Facebook is not the only one to dive on the stock market, what is going on?

Tech markets are in the midst of their worst sessions since March 2020 and the crash of the coronavirus outbreak. Facebook plunges 26%, dragging other companies down with it. Among the worst cases, we note PayPal (-28%), Snap (-23.5%), Block (-11%), Pinterest (-10.5%), Amazon (-7.81%), Twitter ( -5.5%) and Qualcomm (-4.5%).

The Nasdaq index, known for giving the temperature of American technology companies on the stock market, has lost more than 10% since December 31, 2021. In January, it was largely limited by fears among investors over an interest rate hike. interest of the US Federal Reserve (FED). For February, another element has been added: lowered ambitions among some of the biggest companies.

Meta (Facebook), got the ball rolling in the media. But before him, PayPal began its session on Tuesday, February 1 in freefall. Its stock was down more than 26% in the first hour of trading. In question, exogenous factors such as inflation, which have reduced consumption among customers, and certain unsatisfied expectations of investors.

PayPal action at the beginning of February © Google

The next day, it was its main competitors who themselves declined. Despite presenting all its Bitcoin, web3 and mobile payment projects, Block followed the fall of PayPal and lost 11%. Same thing for Affirm, down 9%. Hard to believe that these two titles have lost so much in recent months: 63% since August 6, 2021 at Block, 65% since November 9, 2021 at Affirm.

On Wednesday, when publishing its results, the Meta group created a tidal wave and its title lost more than 26%, unheard of. In the space of a few hours, Facebook saw more than 237 billion dollars evaporate, more than the capitalization of companies like Netflix, McDonald’s, PayPal, Volkswagen, Total or even HSBC and Intel. To learn all about the fall of Facebook click here.

Companies in the wake of Facebook

By withdrawing so much capital from the markets, the fall in the price of Meta prompted investors to pull back on other securities. For most of the companies cited in this fall, the situation was only temporary, as they had not yet published their economic results.

Snap, for example, slumped almost 24% to finally rebound in the post-trade hours, up 57%. Likewise for Pinterest, up 20% after its 10.5% drop. Amazon also gained 17% in those trades at the close. At 3:30 p.m. in France this Friday, when New York opens its markets, we should see quickly if all this period of volatility is resolved.

Snap February 2022 scholarship

Snap jumped more than 50% in post-session trading, the rise was driven by its previous quarter results © Google

One thing is certain, Bitcoin and cryptocurrencies are no longer the only assets to experience such strong fluctuations. The situation of monetary policy, the health crisis, Big Tech recording their best quarters while announcing less good prospects for the future are the main reasons for this instability.

Recently, the company behind WeTransfer canceled its IPO in Europe. Now, the ECB (European Central Bank) led by Christine Lagarde has also left the door open to a firmer monetary policy in 2022 for the banks: a rise in rates is not to be ruled out. After two exceptional years for the stock markets, even deeper corrections are likely.