Unless you’re living under a rock, you have been noticing the stock market has been tanking. Ok that is outrageous for me to say. Only a economics nerd would know this stuff. You’ll probably have more exciting and better things to do.
Now back to the topic of the stock market. It has been demonstrating volatile swings due to the recent bombarding of news. From the previous posts, we learned the efficient market theory incorporates readily available information and displays into the stock price.
You must be wondering what news was just released? Well the Technology sector was slammed recently, which was the main driver of the the downfall of the stock market. The NASDAQ, which is a tech-heavy index, has fallen 2.74%. This essentially eliminated all the gains the sector has made in the beginning of the year.
Let’s dissect why the technology has been failing over the past two weeks.
Facebook has been under scrutiny by the government and the public. Facebook users are wondering if they can trust this social media company with their privacy and information. Facebook’s data was breached the political consulting firm Cambridge Analytica. This firm abused this data to optimize their algorithms to better target their audience. As a result, Facebook stock fell 2.75% due to the failure of protecting their consumers’ information.
Another technology company that has been criticized is Snapchat. This alternative picture delivering social media updated their app in the beginning of the year. From a business perspective, it was a brilliant maneuver to boost advertisement revenue. However, from a consumer satisfaction perspective, it was a disaster. Users complained about the new design and found it annoying to use. As a result, Snap went down 8.83% because they forgot to consider their customers in their new update.
Your favorite online website Amazon has been attacked by President Trump due to abusing the deal with United States Postal Service. Although USPS is profiting from the deal, good ole Donald wants the country’s mail delivery service to charge corporate giant more money on each package. Amazon’s stock decreased by 5.21% as people expect more government regulation on this company. The increased regulation can lower Amazon’s expected earnings.
The electrifying car brand Tesla faced several problems recently. First, the company witnessed its first semi-autonomous car accident, which was forced to halt operations. The public was scared by this news as they see autonomous driving as a danger to public health. Another big issue is Elon Musk alerted investors the company is going to miss the Model 3 production target. These two detrimental situations dropped Tesla’s stock price by 5.13%.
The list can go on as other tech companies have been struggling. Ultimately, technology’s sector poor performance drove the NASDAQ and Dow Jones down.