Elon-Envy, and Jeff’s two left legs: Occasionally the data dancing my screen makes swearing tempting. So, here goes: Oh my flipp’n fetch, Thursday was a honker!
Thwump-smack-Fwipp! That’s three snowballs thwacking Mark Zuckerberg’s head as Facebook’s shares dropped 26.4%, or about $234B -- the largest single-day drop in the market value of… anything, ever -- equivalent to the annual GDP of New Zealand.
Why? Here’s three reasons:
- State of the Mind: Last fall, Zuckerberg declared himself Supreme Ruler of virtual reality, renaming FB “Meta Platforms Inc,” and investing deeply into something-something. He’s building real estate in the virtual world, hoping to make out like a railroad baron in the Wild West. A bold idea, yes, but Thursday’s market was all Missouri, (“show me”) in response to sunk costs, and FB is down almost 1/3 on the year.
Read: Bro’ -- there’s no west coast on this continental expansion -- the Metaverse is borderless. Remember that supply and demand thing?
- Apples bite: In 2021, Apple shut down third-parties’ secret tracking of iPhones, which threatened FB’s marketing revenue. At first, FB said the change was "manageable,” but this quarter’s results indicate an estimated $10 billion hit to annual income.
Read: It’s not only the number, but the sense that FB faked having a handle on it until they couldn’t, and today the punishment is here.
- Tiktok reels get real: Is FB still hip? Just ask the nearest teenager, who’ll just ignore you while glued to Tiktok. When you’re as big as FB, you have to fight off all comers.
Read: Tiktok and others are no longer ankle-biters, they’re making a meal of FB’s user engagement..
But it’s not all bad: As our internal analysts reminded us today, FB is still a massive company, and drives huge advertising flows. Stay tuned for the milking phase.
Flipsidedly, today might record the biggest one-day gain ever. After closing down 7.8%, Amazon announced surprisingly upbeat earnings, and within seconds it kaffwumped up 15%, in Thursday’s after-market trading. If that holds, FB’s worst-day loss lands right in the lap of AMZN shareholders, to the tune of about $230B+.
It’s as if Zuckerberg and Bezos went to lunch, and somehow Jeff walked away with Mark’s left leg tucked under his arm. Jeff is planning to make Zuck’s leg into a table lamp and sell it on, uh… EBay.
Weekly Stories:
- Value compression on the wounds – A silver lining to the rough January is that the air has come out of the U.S. market’s most expensive stocks. We’ll face some more bumps in the road this year, but price corrections have an oddly healing effect on markets once they’ve run their course.
- U.S. earnings season in full swing – With over half of companies in the S&P 500 having reported earnings, we look at how the different sectors have fared, relative to expectations.
- Regional highlights: Canada’s GDP growth was stronger than expected before omicron; Bank of England raises interest rates by 0.25; Momentum weakens for China’s small manufacturers.
Full Story Here: Global Insight Weekly
Enjoy your weekend!
Mark