Facebook and the market

Facebook failed to announce an impressive quarter report and the market punished the company with a cut of $110bn in its market value. Investors focus on its warning about slowing user and sales growth; the standard EPS and revenue report is mixed and should not have such significant impact. $110bn is almost equal to the entire value of McDonald's or Nike, and greater than some corporate giant such as Goldman Sachs and BlackRock.

The investors' major concern is its slowing user and sales growth that it makes investors re-consider Facebook's future prospects and amend their expectations about the stock since the company's trend changes. This is surprising, shown by the market volatile move; however, there was some sign beforehand that Netflix also had a slowing subscription growth. Maybe Google's report made investors gain more confidence in Faang and ignore the downside of Facebook (this quarter has not been easy for Facebook, regarding Cambridge Analytica scandal, and we can see Facebook has been advertising hard in the hope of erasing the negative effect brought by the scandal).

In addition, usually Faang stocks co-move; however, this time we can see some splits. The ones which already reported their earnings are unaffected by Facebook's news; however, Amazon which reported its earnings after Thursday's close suffered from the news and fell by almost 3%, and its quarter report was reasonably fine. This might signal that investors do not hold full confidence in Faang any more.