The Biggest Tech Stocks Come Unglued

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Nasdaq hits record, bounces off, plunges.

Wow, did you see that? That was quick.

Friday morning between 10:15 AM and 11:15 AM, the Nasdaq gallivanted around blissfully for an entire hour in record territory of around 6,340 with not a worry in sight, and then someone must have looked at the valuations or something, and it became infectious, and the sell-orders started pouring out, and by 2:48 PM, the Nasdaq hit a low for the day of 6,160, down 3.1% from peak to trough.

It closed at 6,208, down 114 points, or 1.8%, its biggest daily decline so far this year.

Meanwhile, the Dow rose nearly 90 points or 0.4% to 21,272. And the S&P 500 ended down a minuscule 2 points.

The market is so dependent on the infamous FAANG stocks: Facebook, Apple, Amazon, Netflix, and Alphabet (the Google in the acronym). And here’s how they did:

Facebook fell $5.11, or 3.3%, to $149.60.

Apple fell $6.01, or 3.9%, to $148.90.

Amazon fell $31.96, or 3.2%, to $978.31 now demoted from the elect group for 4-digit stocks back to the large group of 3-digit stocks.

Netflix plunged $7.85, or 4.7%, to $158.20.

Alphabet – the G in FAANG – fell $33.58, or 3.4%, to $952.23, moving further away from everyone’s dream of closing at $1,000.

The five FAANG stocks combined had a market capitalization of nearly $2.5 trillion this morning when the market opened. That’s larger than France’s economy when converted to US dollars, with a GDP of $2.4 trillion. By the time the trading was over, the FAANG stocks had dropped within a hair of France’s GDP, having lost $88 billion less than five hours.

In other news…

NVIDIA which had soared along an exponential curve over the past two years, dropped $10.34, or 6.5%, to $149.60. But the drama was intraday. By 2:50 PM it had plunged a dizzying 15% in three hours from its high in the morning. Whatever that means, it’s not good.

Micron fell $1.85, or 5.7%, to $30.60

Intel was down $0.77, or a more leisurely 2.1%, to $35.71

Applied Materials dropped $2.69, of 5.7%, to 44.74

Tesla dropped $12.68 or 3.4% to $357.32

Snap, parent of Snapchat, a startup with toxic operational fundamentals and an even more toxic approach to shareholder rights, dropped $0.77 or 4.1% to $18.08, its second lowest close since its IPO.

What to make of it? This move shows just how nervous the market has gotten at these nosebleed valuations.

This morning, perennially money-losing and cash-bleeding Tesla had a valuation of $60 billion, a company that sells so few cars that it disappears as a rounding error in the 1.52 million new vehicles sold in the US in May. It’s not even on the scale. Yet folks, now waffling about solar panels too and still waiting for the miracle that has been promised for a decade, think it’s worth nearly $60 billion? The market is currently full of these kinds of crazy valuations. And everyone wants to pick up the last nickel in front of that steamroller they already see coming. So their hands get a little twitchy.

The auto industry faces “Unprecedented Buyer’s Strike,” says Morgan Stanley. Read…  Wall Street Wakes Up to #Carmageddon




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  65 comments for “The Biggest Tech Stocks Come Unglued

  1. cdr
    Jun 9, 2017 at 6:27 pm

    now let’s see some of that in the bond market. I want some yield.

  2. Petunia
    Jun 9, 2017 at 6:35 pm

    I like Musk but I don’t think any of these companies are worth 60B, most not even 6B.

    • Jon
      Jun 9, 2017 at 10:20 pm

      Musk is making money just bec on taxpayers back…

    • Coaster Noster
      Jun 10, 2017 at 12:13 pm

      I have read (repeatedly) that Musk thinks the valuation is completely absurd (“insane”, or “nuts”) but I am thinking his thinking is the flipside of the old adage, “The Stock Market can remain “wrong” for longer than you can stay “solvent”.

      Musk bows to the marketplace when it comes to valuation: it is what it is.

  3. Gershon
    Jun 9, 2017 at 7:44 pm

    Goldman Sachs just warned of an “air pocket” under these high-flying, insanely overvalued stocks. Has Goldman also gone massively short in preparation for ordering its helmet-haired hobbit at the Fed to hike rates enough to implode the Wall Street-Federal Reserve Ponzi market? Is the Great Muppet Slaughter of 2017 about to commence?

    • Kasadour
      Jun 10, 2017 at 9:35 am

      Helmet -head has no choice ! She must raise rates in order to have any ammo to throw at the next Financial Crisis. But the next FC is going to be the last. And the FED’s ammo will be totally ineffective.

      • Gershon
        Jun 10, 2017 at 10:55 am

        If Yellen raises rates by more than .25%, she implodes the Fed’s asset bubbles and Ponzi markets.

        Yellen knows this. So do her flying monkeys, despite their incessant jawboning about a mythical rate hike. So do her Goldman Sachs organ grinders.

        Unless Yellen’s Goldman Sachs handlers take out massive short positions, then order their creature Janet to implode the Wall Street pump & dump, there will be no normalization of rate hikes, ever, unless and until the bond vigilantes force Yellen’s hand.

        • Mark Ticker
          Jun 10, 2017 at 2:17 pm

          It will implode anyways.

        • nick kelly
          Jun 10, 2017 at 10:23 pm

          I shouldn’t bother with this but if you want to run scams you need a MUCH less visible perch than FED Chairperson.
          Or do you think she gets a brother-in-law to trade for her?

    • nick kelly
      Jun 11, 2017 at 6:31 pm

      Snapchat is the one to watch. It is massively shorted and in August the lock up expires. It is not far above the IPO now and could plunge to half of it.

      It is not a major but it is one big honking canary.

      Citi just called it a sell three months after calling it a buy.

  4. James
    Jun 9, 2017 at 7:54 pm

    Did AMZN drop to 927 today?

  5. David
    Jun 9, 2017 at 8:04 pm

    Gorilla Glue just reported its largest order in history. They will be working all weekend to fill it before the market opens on Monday.
    This is the real test for Gorilla Glue. Can it really fix anything on the planet or will the cloud be raining on Monday?

  6. chip javert
    Jun 9, 2017 at 8:10 pm

    No.

    For future reference, try finance.yahoo.com, enter “amzn”.

    You’re welcome.

  7. tony
    Jun 9, 2017 at 8:43 pm

    When things go good the donkey walks on the ice.

  8. r cohn
    Jun 9, 2017 at 8:49 pm

    The below link was a article from March 2000,describing the “inevitable rise of CSCO to a 1 trillion $ market cap.Two years later CSCO had plunged almost %85 from its highs.
    Will it happen to the current crop of very highly valued stocks.IMOP this is a %100 probability.The only question is when and from what level.
    An interesting point regarding TSLA. Recently its market cap was the largest of any US car maker and was almost equal to BMW.

    http://www.bizjournals.com/sanjose/stories/2000/03/20/story2.html

    • andy
      Jun 9, 2017 at 9:25 pm

      Half-off Jan 2019 Alibaba puts are selling for cents on a dollar. Investors write puts for income.

      • Bellinghouse
        Jun 10, 2017 at 8:44 am

        That they do! And occasionally they have the stock put to their accounts. I only like selling puts on Index ETFs after a 20% or so drop. Then I do it for at a strike price of another 20% drop one year out. There is enough fear at that point to earn you a very nice premium. The only issue is if you do it on a large scale, and the market drops that amount, you also want to be doing outright buying prior to the puts expiring.

        • r cohn
          Jun 10, 2017 at 10:17 am

          Selling puts is equivalent to buying the stock and selling the call.
          Yes, the amount of the premium cushions any lost,but if the stock goes down considerably ,you stand to lose big time

        • Bellinghouse
          Jun 10, 2017 at 10:31 am

          I don’t view it as a loss if I would put in a buy order for the outright purchase of the shares at the much lower price point (which I also do). I would only sell a put if I wanted to own the shares anyway. Again, I never sell puts at market tops (such as now). The premium you receive is lousy when anytime the VIX is low. Wait until a market crash, then sell puts. You get a hefty premium when others are running scared, and also roll the dice on picking up the shares a year on, for 20% off the already low price. Of course you have to have a lot of cash sitting around to do this and still sleep well at night.

      • John M
        Jun 10, 2017 at 3:53 pm

        Andy

        In 1987 I went to lunch after that “October Black Monday” with a London Options Broker. He had the dubious privilege of calling up clients to let them know they’d become “Minus millionaires” . They had written out of the money put options that had exploded in value. Its not for the faint hearted to write put options..

        JM

        • andy
          Jun 10, 2017 at 8:45 pm

          John,
          I would not dare to write puts altogether. So lately I was buying long duration out of money puts in high-flyers (FANG or similar). Thank you for the reference.

        • nick kelly
          Jun 13, 2017 at 12:28 pm

          If we have another like it there will be some ed re: stop loss orders too.
          When Sino-Forest blew up a guy with a stop loss at 16 got out at 6.

    • Gershon
      Jun 10, 2017 at 6:33 am

      The Fed’s engineered boom-bust cycles every eight years or so (tech bubble 1.0, housing bubble 2.0) are the most efficacious means of transferring the wealth and assets of the middle class to the Fed’s oligarch accomplices. I suspect Da Boyz are getting ready to exit the Wall Street-Federal Reserve pump & dump and go massively short in preparation for the Great Muppet Slaughter of 2017.

      • Coaster Noster
        Jun 10, 2017 at 12:18 pm

        I don’t see a big white board with the words “Boom – Bust” in a room of “financial engineers”, who then work out a super-secret, never-to-be-divulged plan.

        Conspiracies are the easiest way to explain things: “You weren’t in the room when the plan was made.” Every “plan” is always air tight!

        Try the real world, which vastly vastly more complex since 2000.

        • TJ Martin
          Jun 10, 2017 at 3:18 pm

          ” Try the real world, which vastly vastly more complex since 2000 ”

          If i may .. the real world has always been vastly more complex than any inane conspiracy theory is capable of explaining . Problem is unlike yourself and I the majority prefers the simplistic ‘analysis ‘ and solution regardless of how erroneous , damaging and destructive it may be

  9. Mark
    Jun 9, 2017 at 9:18 pm

    I don’t see how anything has fundamentally changed. The yield curve is still normal, the Fed will remain accommodative, interest rates will remain low, ECB and BOJ will continue QE, stock buybacks will continue…

    This is just another opportunity to buy the dip and scalp a quick 5-10% on the QQQ over the next month or so.

    • Junglejim
      Jun 9, 2017 at 11:34 pm

      If the economy was on a sound footing, you might have a case. But the economy is not fundamentally sound. Economies are meant to create wealth, but all this one has created for a long time is debt. Even worse, broad swathes of the Main Street economy are starting to buckle, retail, cars , etc.

      Do what you wish with your money, but mine is in the “First Bank of Beauty Rest”.

      • kam
        Jun 10, 2017 at 9:49 am

        “Economies are meant to create wealth”

        That’s so yesterday. Don’t you know Central Banks create wealth?

      • Jim Graham
        Jun 10, 2017 at 2:25 pm

        Mine is in Hip National.

      • 728huey
        Jun 11, 2017 at 4:15 pm

        You mean the private equity investment firm of Simmons, Sealy, Serta, Stearns and Foster.

    • Mark Ticker
      Jun 10, 2017 at 2:23 pm

      And if 3Q falls another 10%?

    • John M
      Jun 10, 2017 at 6:26 pm

      Mark

      Have a look at the IRX 13 Week Interest rate Index. Its doubled from 5 to 9.8 since March..

  10. andy
    Jun 9, 2017 at 9:19 pm

    By the time it’s done it will be the end of index investing. Hope Boggle and Buffet are well to see it happen.

  11. Suzie Alcatrez
    Jun 9, 2017 at 10:10 pm

    I think Uber will be the domino that starts it all.

    The VCs have to be getting nervous about Uber.

    • Vespa P200E
      Jun 10, 2017 at 11:30 am

      Yep there has been slew of downrounds and thanks goodness we don’t hear as much about the damn unicorns lately.

      And there will be more DEAD unicorns and soon to be next downturn started with, gaps, Theranos.

      • kriag
        Jun 16, 2017 at 12:46 pm

        What are the dead unicorns so far? Color?

    • MC
      Jun 10, 2017 at 1:05 pm

      The problem with Uber is people are suddenly discovering they possess no unique technology and offer no unique service: Lyft, Via, Didi Chuxing and a slew of others offer exactly the same. Right now there’s only the hope in the near future Uber will somehow manage to leverage its position to become profitable, and highly so.

      I call this the Tesla Effect: most financial investors do not take the time to fully assess a new company’s potential and see if the technology and/or business model pitched as “unique and revolutionary” is truly so. They just buy into the promises.
      Tesla (like Uber) has exactly zero unique technologies: electric vehicles have been around for well over a century and manufacturers such as Daimler and Komatsu have been working on autonomous vehicles since the 80’s and have started to market the technology already. The only thing they have is they put an electric drive into a sleek sports/luxury car but guess what? That is even less unique than the rest of their technologies as it’s merely a matter of design and marketing.
      But perhaps they are highly profit… ah! ah! ah! Losing money on every car you manufacture is something British Leyland was doing already back in the 60’s with the Mini. Hardly unique.

      Enzo Ferrari famously said you either go racing to sell cars or sell cars to have the money to go racing, no way in between. It can be adapted to a slew of other business models and it always have one point in common: at the end of the fiscal year you have at very least to break even.

      • Kraig
        Jun 16, 2017 at 12:53 pm

        I thought Tesla’s battery in terms of weight/dollar per kw and possibly motor/motor controller are pretty unique(although,some of that might be their partners, and they did open-source some patents.) Unless there are competitors that have emerged, I’d say there not worthless, but certainly over-hyped. If the tech was as good as the valuation, they would be leasing batteries and motors to automakers.

  12. Pinion
    Jun 9, 2017 at 10:21 pm

    “What to make of it? This move shows just how nervous the market has gotten at these nosebleed valuations.”

    Anticipation of a 0.5% rate hike by the Fed on June 14. Money is being taken off the table. And if they don’t hike the money goes back on the table.

    Even if they hike it will be cut back down by the end of the year.

  13. nick kelly
    Jun 9, 2017 at 10:39 pm

    Note that 2 of the five depend on ad revenue. That’s a lot of eggs in one basket.

    • Kraig
      Jun 16, 2017 at 1:00 pm

      I’ll bet that’s why Google pushed google Apps for business and API for ‘App companies’ a bit of diversification(and then there’s the self-driving car tech) and other things in Alphabet. is definitive more diversified than the others. I’m convinced Uber will come undone though. They’ve gone on the record stating they will continue to operate illegally and are finding out their workers are ’employees’ when they come down, they will probably take the whole ‘gig’ economy with them.

  14. Jon
    Jun 9, 2017 at 11:04 pm

    Don’t worry
    No need to panic
    Everything is awesome

    Next week it’d be business as usual

  15. OutLookingIn
    Jun 10, 2017 at 12:02 am

    Amazon’s lending service could be in for a rough ride.
    Since the move by Amazon into the lucrative small business loans sector, they have loaned $3 billion to over 20,000 small businesses. Just the current year tally, is now over $1 billion in loans.
    Considering the troubled roiling credit market and the turmoil that is/has will occur as far as defaults/bankruptcies, not only of consumers but of small business that depend on them, Amazon may find their “lucrative” loan business comes back to bite them.

    These are the small financial details which fly under the radar, that will start a cascade of write downs, with the result of throwing the secondary market of OTC derivatives sector into a tailspin. Think the ‘Asian Contagion’ of 98, that started in Thailand with the baht and ended up travelling to Russia where it crashed the Russian bonds. Guess who was neck deep into that bond mess? Does (LTCM) Long Term Capital Management ring a bell?
    The sheer complexity of intertwined, interconnected, woven together credit markets 20 years later, are multiples of the size of markets back then. Of not only valuation, but of financial products.
    The very thin veneer of calmness in the markets, is now so thin as to be transparent. It comes this way. Its close.

  16. Frederick
    Jun 10, 2017 at 2:45 am

    The Nasdaq was flash crashing for awhile until the PPT was able to pull it out of the nosedive(crash) Question is how much longer they can be effective when the public knows the truth as is evident by these comments

    • Coaster Noster
      Jun 10, 2017 at 12:25 pm

      “PPT”? What evidence? How does the “PPT” take into account all the algorithms that control seventy percent of all trades?

      Look at the three WSJ articles recently published on algorithms? Not once, not once, was any mention made of the mythical “PPT”.

      The current year is 2017. PPT had its heyday in 1998, 2000. A lot has changed.

      • R2D2
        Jun 11, 2017 at 7:35 pm

        Oh, so you want WSJ to actually acknowledge PPT? That’s like a bank robber going to the police and telling them he is a witness because he was at the bank wearing a mask at the time of the robbery.

        Headline News
        “And our PPT Team Successfully Reversed the Intraday Falling of NASDAQ”

  17. Meme Imfurst
    Jun 10, 2017 at 7:11 am

    My twenty-something waiter at a local eatery was giving me stock tips on Thursday and suggested I get an ‘app’ for my phone so I could watch my profits. Suggesting that I do it ‘pronto’ because every dollar counts, I nodded.

    OK I said, and took a bite of my sandwich……

    • hidflect
      Jun 10, 2017 at 7:35 am

      Joe Kennedy and the shoeshine boy…

    • RangerOne
      Jun 10, 2017 at 11:13 am

      Like listening to a guy give you health tips while snorting coke at a bar….

    • Vespa P200E
      Jun 10, 2017 at 11:34 am

      LOL – he wasn’t gloating bout the SNAP, right? I was laughing when heard SNAP IPO brought in millienials new to stocks. Shorted few hundred and closed shorts recently.

      All these people gloating bout housing and stock rises – just like 2006 on housing and early 2000 when my office mates were so proud of their stock picking skills glued to motley-moron website and newbie going all in on CSCO right before the plunge.

  18. Ken
    Jun 10, 2017 at 7:31 am

    Meme Imfurst. Well stated Mr. Kennedy. LOL

  19. truth
    Jun 10, 2017 at 7:58 am

    There is not a company on that list that is worth more than 1 billion max. Most of them are not tech companies but are merely amalgams of very old technology that is getting very long in the tooth. Most of them produce nothing and if they were gone tomorrow no one would even remember of miss them.

  20. Jun 10, 2017 at 9:04 am

    I bought couple $000 short slightly out of the money calls on FAANG Friday. NVDA too. Monday is going to be very good or very bad for FAANG (and me)

    • Coaster Noster
      Jun 10, 2017 at 12:41 pm

      Try Tuesday. Everyone is thinking Monday, but there will be (IMHO) a lot of feint moves, and not much will change.

      • Shawn
        Jun 11, 2017 at 12:33 am

        Dame, nerves of steel!

  21. kam
    Jun 10, 2017 at 9:54 am

    Amazon. 189 P/E. That’s some future growth in earnings. Or that share price might be a bit high.

  22. Tibbi
    Jun 10, 2017 at 10:21 am

    These tech companies are the new democracies — bringing content, commerce, and services that we’re once out of reach to the masses. It’s no wonder their valuations surpass some of the world’s biggest and most advanced countries. FAANG, our modern benevolent overlords who give away everything for cheap or free, are only to be surpassed by the coming wave of peer-to-peer (cheap, free, no overlord) and possibly ML, AI, robotics.

    • Hiho
      Jun 10, 2017 at 1:31 pm

      Sarcasm?

  23. michael Engel
    Jun 10, 2017 at 3:09 pm

    It was very quiet until Friday.
    On the trading days (TR) in front & after Memorial day, the 2 days of 5/26 and 5/30, – when the market have rested just above 3/1/17 Buying Climax, – two of the smallest candles in the last 20 TR,
    had appeared on the chart.
    The market was resting between activities. Contracted to nothing.
    Volume started to rise, but nothing really was able to moved up.
    Until Friday 6/9/17, when SF was hit by the first “self drive in car bomb”. That was hit #1. Number #2 and #3 will follow.

  24. TJ Martin
    Jun 10, 2017 at 3:14 pm

    Finally ! A small dose of reality . Now lets see how long it takes for the ‘ bots ‘ to come in and undo it … again .

  25. R Davis
    Jun 10, 2017 at 5:06 pm

    “They” took it all to infinity – creating an impasse – stagnant waters where disease breeds.

    “excuse me ma’am but your trillion dollars is not worth a trillion”
    “yes it is”
    “well ma’am, actually it is not”
    “Yes it is I tell you”
    “no ma’am it is not”

    Everyone is still hanging on to the fairy story for dear life – the inevitable fall from riches to rags must happen – a cathartic cleansing is on it’s way & not before time.

    • Tom Kauser
      Jun 12, 2017 at 11:07 am

      Bitcoin malaise or how I left a billion on the table because the kitchen had no doors or windows?

  26. Tom Kauser
    Jun 12, 2017 at 11:04 am

    The guy from amazon pulled a bill gates (2000).
    After trying to break up Microsoft bill Clinton got a first hand show of force as bill gates singlehandedly tanked Tech. ? Followed by a reenforced commitment to follow PPT guidelines? Buy said dip. TINA

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