It’s been a week of hell for tech firms across the board on the stock market. The so-called FANG companies (Facebook, Amazon, Netflix, and Google) have all seen their stocks tank this week, as have other major tech companies including microblogging platform Twitter, chip manufacturer Nvidia, and electric vehicle manufacturer Tesla. From user backlash following data privacy concerns to governmental intervention to poor forecasts for the tech sector’s future, a variety of factors have come together to make this one of the worst stock market weeks for the tech sector in recent history.
Leading the plunge is Tesla, which has seen its stock plunge 14.6 percent this week following a fatal crash involving a Model X on March 23. The American National Transportation Safety Board announced a full-scale investigation into the crash earlier this week, causing more headache for Tesla as it struggles to meet production schedules for its Model 3 vehicle. Multiple delays have forced the company to slash its production targets by half – from 20,000 a month in December 2017 to 2,500 a week by the end of the first quarter, and hopefully 5,000 per week by the end of the second quarter.
The delays prompted Moody’s to lower Tesla’s corporate rating one notch to B3, which further drove the car manufacturer’s stock value down. Tesla’s stock troubles may give Founder and CEO Elon Musk sleepless nights after the company’s shareholders recently agreed to a deal that compensates him based solely on the company’s market performance.
Twitter has been the second-worst performing major tech company this week, losing 8.1 percent in stock price as the fallout from the Facebook Cambridge Analytica episode expanded to other platforms and user backlash over data privacy affected other social media firms and tech companies as well. Plus, short seller Citron Research said on March 27 that it was deeply concerned about Gnip, Twitter’s data licensing business. Citron estimated that Gnip could contribute $400 million to Twitter’s bottom line this year, but given the additional scrutiny the platform is likely to face over data privacy concerns in the coming weeks, it’s unclear how things will pan out for the social media platform.
Amazon and Netflix have also lost 4.7 percent and 4.5 percent of their stock price respectively this week. Amazon stock dropped after a report by news portal Axios highlighted that US President Donald Trump “has a deep-seated antipathy” towards the platform and might consider using anti-trust law or other legal options to force the company to pay higher taxes, or even “break up” the e-commerce giant. Netflix, for its part, fell victim to the wider slump in the market as spooked investors offloaded tech stock. However, the video streaming service is set to grow in the future, backed by a strong recommendation by Barclays earlier this year.
Facebook’s downward slope continues, as the company shed further 3.3 percent in stock price this week. Since the Cambridge Analytica scandal broke, Facebook has lost nearly 20 percent of its stock value; however, new measures announced by the company yesterday might mark a turning point as the social media platform attempts to win back investor and user trust. Google parent Alphabet Inc. rounded off the list of losses this week, losing 1.4 percent of its stock price. On a different note, chip manufacturer Nvidia also saw a sharp decline in stock value this week after it announced that it was halting all real-world tests of self-driving cars following an incident last week where an Uber self-driving vehicle killed a pedestrian.