The FANGMAN stocks went to heck afterhours.
Just a note to show how decrepit and ephemeral the enthusiasm for stocks is.
So far in October, the S&P 500 has booked 13 losing days, including October 10, when the index dropped 3.3%, and October 24, when it dropped 3.1%. Then came today, with the feel-good moment of a boisterous 1.9% gain. And then came after-hours trading, and nearly everything went to heck, particularly the FANGMAN stocks that weigh so heavily on the index with their $4-trillion market cap. And Friday morning looks already ugly. All of the FANGMAN stocks were in the red in late trading:
- Facebook [FB]: -2.3%
- Amazon [AMZN]: -7.4%
- Netflix [NFLX]: -2.8%
- Google’s parent Alphabet [GOOG]: -3.7%
- Microsoft [MSFT]: -1.5%
- Apple [AAPL]: -0.4%
- NVIDIA [NVDA]: -2.8%
There were some standout reasons:
Amazon plunged after it reported record profit but missed on revenues and guided down Q4 expectations for sales and profits, a sign of slowing revenue growth. It was down as much as $150 a share, or almost 9%.
Google’s parent Alphabet reported that revenues grew 22%, which missed expectations. Earnings beat, but a considerable slice – $1.38 billion! – of those earnings came from the gains in its portfolio of equity securities. CFO Ruth Porat warned that traffic acquisition costs would increase further as consumers are shifting search activity from desktop computers to mobile devices. Shares plunged up to 5%.
Intel [INTC] reported earnings that beat expectations, and shares initially jumped, but during the earnings call, things got muddled fast, and shares gave up their gains.
Advanced Micro Devices [AMD], an Intel competitor, had plunged 15% during the day despite the big rally in tech shares, after reporting results and discussing a graphics-chip glut resulting from the collapse of the crypto-mining business. It lost another 3% after hours.
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This admission, by one of the architects of Facebook, comes on the heels of last week’s hearings by Congressional committees about Russian interference in the 2016 election, where the general counsels of Facebook, Alphabet (parent of Google and YouTube), and Twitter attempted to deflect responsibility for manipulation of their platforms.
The term “addiction” is no exaggeration. The average consumer checks his or her smartphone 150 times a day, making more than 2,000 swipes and touches. The applications they use most frequently are owned by Facebook and Alphabet, and the usage of those products is still increasing.
In terms of scale, Facebook and YouTube are similar to Christianity and Islam respectively. More than 2 billion people use Facebook every month, 1.3 billion check in every day. More than 1.5 billion people use YouTube. Other services owned by these companies also have user populations of 1 billion or more.
Facebook and Alphabet are huge because users are willing to trade privacy and openness for “convenient and free.” Content creators resisted at first, but user demand forced them to surrender control and profits to Facebook and Alphabet.
The sad truth is that Facebook and Alphabet have behaved irresponsibly in the pursuit of massive profits. They have consciously combined persuasive techniques developed by propagandists and the gambling industry with technology in ways that threaten public health and democracy.
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