Technology Stocks Lose Billions Amid Fears of Increased Regulation and Trade Wars
The so-called FAANG stocks – Facebook, Amazon, Apple, Netflix, and Google parent Alphabet – continued to fall this week amid growing fears of increased regulation, trade wars, and social backlash. Since the Nasdaq Composite’s March 12 peak, the FAANG stocks have lost a total of $397 billion.
FAANG stocks are the five most popular tech stocks in the market and are frequently grouped together to capture the collective impact that these companies have on the markets. A collective up or down movement in these tech stocks correspond highly with movements in the S&P 500 index. On Monday, the S&P 500 fell 2.2%, while the Nasdaq Composite lost 2.7%.
Analysts believe that several political and social influences have caused the sharp drop in tech stock values in recent weeks. For one, Amazon lost billions of its market value after President Donald Trump repeatedly “took to Twitter to blast the company’s business practices” regarding its tax advantages and wants to “go after” it. Facebook’s stock also saw a sharp decline from the fallout from the data sharing scandal with Cambridge Analytica, revealed in March. In the wake of these and other events, investors fear that tech giants may be subject to greater regulatory scrutiny, both in the U.S. and abroad. Some analysts also cite that recent decisions to increase tariffs on Chinese goods, and China’s corresponding tariffs on U.S. goods (the colloquial “trade wars”) have taken a toll on tech stock outlooks.
Although the market began to rally towards the end of the week, the outlook in the coming months remains volatile.
Spotify Goes Public
Spotify shares began trading on the New York Stock Exchange this Tuesday, during an uncertain time for technology stocks. Shares sold at an opening price of $165.90 per share, nearly 26 percent above the reference price of $132 a share set by NYSE late on Monday. Shares closed at $149.01, leaving Spotify with a market valuation of $26.5 billion.
Spotify, like many modern companies, went public to increase liquidity and reduce volatility for its shareholders. One big winner was Sony, which held 5.7 percent of the streaming service and sold 17.2 percent of its stake when Spotify was listed, resulting in a payout upwards of $250 million.
Apple “Batterygate” Lawsuits Consolidation
Some five dozen Apple consumers have filed at least 59 lawsuits since December, accusing Apple of slowing down their phones to push customers to buy new iPhones. These lawsuits were a reaction to Apple’s disclosure that it slowed down old phones to preserve battery life. Users are seeking class-action status and efforts to combine these cases began on March 29. Meanwhile, the U.S. Judicial Panel on Multidistrict Litigation ruled that the lawsuits against Apple on the matter should be sent to the Northern District of California for further legal action.