Tech stocks crash: Shares of the big technology giants took a big dive Friday. This resulted in Nasdaq experiencing its worst week of 2017. The ‘Big Five’ of Alphabet, Amazon, Apple, Facebook and Microsoft lost over $97.5 billion between them between in the 24 hours from closing Thursday.
Apple shares dropped 4% Friday, and the other four fell by over 3%. The big 5 traded at twice their normal 30-day average volume of trade. This is an abnormal situation for companies that normally do well. In fact, the technology select sector is up almost 16% this year in spite of this drop. IT specifically has gained most in the S&P 500, having gained 18.5% this year.
Shares in these well-known companies were something that everybody had to have, and they may have overextended their real value. Investors may have become nervous at the high valuations put on them. What appeared to be safe investments suddenly became more of a risk as the valuations increased beyond what may have seemed reasonable.
Amazon share price had increased by 206% since 2014, and Facebook by almost 150%. In fact, the lowest performer of the five was Apple, with a mere 67% gain. The bubble had to burst sometime and it happened yesterday. There was no question of the companies cracking – just shareholders becoming nervous at the increasing valuations.
Other markets have been doing well recently. Bitcoin and gold have been particularly robust, but nothing like these tech firms. However, the US dollar has not fared so well and oil prices have been reducing with continuing oversupply. Nevertheless, stocks that are rapidly increasing in value are a magnet to many who want to make a quick buck.
The question is when to sell – and that is sometimes decided by fear. Fear by some that the bubble will burst and they will lose out unless they sell first. It just takes one or two, and the balloon collapses on itself. And that’s what appears to have happened. The result: tech stocks crash and Nasdaq has a bad week.
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