Here at Classiarius we populate our platform with geopolitical views, financial ideas, interviews and 3-month trend forecasts. We do not give trade ideas but we do however, with a high degree of confidence, identify factors that arise in subtle changes in fundamentals – our goal is to identify on 3-month trends before the market does, giving you an advantage. In the past 4 months we have often talked about FANGS, the tech giants that have done some of the heavy lifting in the tech space rally for years. These firms moved from strength to strength. Facebook, one of the tech darlings enjoyed hours of free publicity when its founder spoke before Congress, ensuring that his company is fair and has no political bias. Yes, and cows fly.
Currently we are now earnings week. And Facebook reported weaker-than-expected revenue for the second quarter as well as disappointing global activity of everyday users. These facts were of concern to the investment community and they did what free market participants in capitalists societies often do – they punish the stock – driving it down by 24 percent, triggering the biggest one-day stock loss in history, as Facebook`s saw 120 billion dollars of company value vanish into thin air. Mr Zuckerberg personally lost more than $15 billion dollars of his wealth when Facebook stock collapsed.
As mentioned above, our team, with over 25 years of studying and writing financial research, is not focused on short, one-day or one week trade ideas. We focus on implementation at reversals, you know, changes in medium to long-term trends that are influenced by very subtle but powerful trends. The release of a disastrous quarterly report has meaning and that shockingly fast 1 day sell-off of 24 percent is possibly the start of a long-term event. So we are interested. On September 22, 2000, Intel stock imploded, with this blue chip name losing $90.74 billion dollars of market value on one day as that famous dot com bubble burst. That same year, Microsoft lost $80 billion dollars of market cap in a 24 hour period. And back in 2008, ExxonMobile saw its firms`s value fall $52.5 billion in that same one day period.
Two key factors sent this surprising shock to Facebook investors – disappointing global daily activity by users and expectations of slower revenue growth rate in the 2nd half of 2018. Let`s be clear, these are negative trends, not one week disappointments. Investors dumped this stock aggressively.
To make matters worse, several of the top analysts on Wall Street downgraded Facebook`s stocks. This is a clear no confidence vote as some of these Facebook experts see stagnation of core user growth.
Facebook is currently suffering from disappointing hard figures mentioned above such slower revenue growth but there is an imagine problem that Mr Mark Zuckerberg must address quickly or this Tech giant might experience a long cold winter in 2018 and 2019.