A torrid time for tech heavyweights
Politics, much like Donald Trump’s angry tweets about Amazon, has hit the big tech stocks hard
It’s been a torrid few weeks for the Faangs — the acronym that describes heavyweight tech stocks Facebook, Apple, Amazon, Netflix and Google.
The Faangs drove a period of handsome stock market growth with low volatility until January, after which a series of corrections caused their valuations to plummet and high volatility and bearish sentiment to return to the market.
What is peculiar about this particular slump is its intersection with politics.
Leading the downward charge was Facebook. It was found to have shared the private data of 50m users with Cambridge Analytica, which used this information to target potential voters in the US election and in the Brexit referendum.
The implication is clear: if it weren’t for the manipulation enabled by Facebook, Donald Trump might not be US president and the UK might still be a grumpy member of the EU.
Facebook stock was cut down to size as traders factored in tighter regulation and the strangulation of Facebook’s lucrative advertising model.
This came amid Trump’s announcement that he was starting a trade war with China — something likely to affect the technology sector.
Then there was more politics, as Trump took to Twitter to vent his anger at Amazon.
Amazon is owned by Jeff Bezos, who also owns The Washington Post, the poster child of liberal critique of Trump.
Trump tweeted: "Unlike others, they [Amazon] pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the US), and are putting many thousands of retailers out of business!"
When it was pointed out that Amazon was, in fact, responsible for the postal service’s best revenue stream, parcel post, Trump tweeted: "Only fools, or worse, are saying that our money losing Post Office makes money with Amazon. THEY LOSE A FORTUNE, and this will be changed. Also, our fully tax paying retailers are closing stores all over the country... not a level playing field!"
Amazon’s stock has plummeted as Wall Street digests the possibility that the company may face greater taxation and perhaps even a regulatory intervention to end its dominance.
It seems, to borrow the old phrase, that "this time it’s personal".
Writing for Reuters, Andrew Kelly quoted a White House source saying: "[Trump is] off the hook on this. It’s war."
Another source said: "He gets obsessed with something, and now he’s obsessed with Bezos. Trump is like, how can I fuck with him?"