Shares of Facebook and Twitter: correction sector or the beginning of a collapse?

© RIA Novosti / Natalia to Seliverstova in fotoracconti social networking on the smartphone screen. Archival photoShares of Facebook and Twitter: correction sector or the beginning of a collapse?© RIA Novosti / Natalia to Seliverstova the image Bank

The collapse of the shares of the Internet giants Facebook and Twitter, which happened in the last few days, has caused investors and the General public a natural question, whether it is a local correction of the sector or the beginning of the collapse of the global stock market. RIA Novosti interviewed analysts, trying to get their opinions on the matter, and also about the possible impact of these developments on the quotations of Russian companies.

The collapse of the Internet giants USA

When stocks digital broadcaster Netflix after reporting July 16, fell approximately 14% of the investors regarded it as an isolated fact.

But next week, from July 25 to July 27, when the social network Facebook has released its report for the second half of not granting market experts, her papers fell out of 217,5 USD to 173 USD, for a total of 20%, causing a shock to investors.

Then the shares of Twitter plummeted on Friday by 20.54% after the publication of the financial statements of the company, as well as criticism of U.S. President Donald trump, implying that the company is secretly discriminare the publication of the famous members of the Republican party.

«Facebook was a pioneer fall, and Twitter as his closest sibling, on Friday, almost repeated his fate» — the analyst of «Finam» Sergey Drozdov.

«Investors absolutely do not care what the news fell shares of Twitter at trump statements about «shadow Bane» or that the number of subscribers to the service decreased significantly Disturbed the fact that the action may fall for a day on 20,5%,» — says Andrey Vernikov, Deputy General Director for investment analysis of IR «Zerich capital Management».

Among disappointed investors, then issuers has also been found and Intel shares (to -8.8%).

Up and down the «wall of fear»

«For the last time (the index high-tech companies — ed.) NASDAQ has updated several times historical highs, and investors began to get nervous, as the markets grow and climb the «wall of fear». It is worth noting that the S&P 500 almost reached key resistance from the technical point of view – 2850 points — and went to the back» — said Drozdov.

And since the NASDAQ high beta, which means a stronger decline or growth in comparison with other major us indices such as the S&P and Dow Jones, he falls more, says the expert.

At first glance, the events of late July you can start a process comparable to the catastrophic «burst of the dot-com bubble» of the turn of the century. And some Parallels here can be traced.

According to Mikhail Krylov, Director of the analytical Department of «Golden Hills – Kapital AM», the stock market in General «learned» automatically take into account in the price and past growth in financial performance and projections for the next six months, and is now trying to predict essentially the movement of money in the next six to ten years.

However, a sharp peak of individual securities are caused by the fact that their price dynamics comes there, where before were absent on the charts when the image of the future drawn high-tech companies, detached from reality, and their quotes, or fly too high or fall too low, he says.

The reaction of the Russian companies of the it sector

Shares of Russian Internet companies — «Yandex» and Mail.Ru Group — reacted to the collapse of Facebook, as the most liquid securities in the Russian IT sector, experts say. At the same time, their fall was not as severe as American companies.

Stock Mail.Ru Group on the London stock exchange (LSE) on 25 and 26 July (during the sharp fall in Facebook in the USA) decreased by 0.92% and 1.36%, respectively to the levels of the previous close, and on Friday and even managed to rebound by 1.38%.

Paper «Yandex» on 26 and 27 July have also been sales on the NASDAQ, losing consistently 3.24% and 1,24%. On the Moscow stock exchange the shares of «Yandex» was first supported by the good company’s report on US GAAP for the second quarter, but on Friday a wave of negativity overtook them, and the paper has gone down by 1.73%.

The fear is excessive

Specific risk information sector, of course, impossible to ignore, and investors ‘ disappointment in these papers might be.

In the words of Vernikova, American analysts believe that the long-term prospects for tech companies is good, but in the coming months, some of them «shake». «The same «Yandex» – he went up to the annual maximum, but who wants to risk it? I want to take the risk, when the stock corrected a bit,» he adds.

«After the crisis, the «dot-com» half of the companies recovered in 2004, but some «horse» put – that’s an interesting question. It is difficult to assess the prospects of IT companies and the introduction of their new services. Now on the market there are companies that have prospects, for example, LinkedIn or Tesla, and the real income is not. When they introduce something new, it is difficult to imagine how this will work in ten years,» said Vernikov.

But Drozdov considers that the analogy with the collapse of the «dot-com» 2000-2001 in America to hold still incorrect, as it was a completely different situation: then there was the IPO a lot of startups, many of which had no actual business, and, in the end, the bubble burst. However, he notes that the strongest survive, such as Microsoft and Intel.

In contrast, according to Krylov and Drozdov, the results of Facebook is not as bad as they were appreciated by investors, so the old growth securities (prior to their collapse in the financial statements) is not associate with inflating the bubble.

Shares of Facebook and Twitter: correction sector or the beginning of a collapse?© AFP 2018 / John Taurocholate fined Google for a record of 4.34 billion evrokrov believes that 42% revenue growth at Facebook is not so little. And 22 million new active users, which Facebook added in the last quarter, of course, less than half the 41 million a quarter earlier, but that’s a lot for a site that is struggling with competitors, and it’s not like the crisis, he said. The expert stressed that Facebook faces competition from Google, which has reduced advertising rates and thus increased revenue.

Further, Drozdov says that the arrival of trump, when he «began to lead the world,» placing posts on Twitter, has added to the popularity of the network, in particular, can be explained by the previous growth of securities of the company.

Moreover, their reports, investors are already pleased with such major market players like Amazon and parent company Google — Alphabet.

«The decline in U.S. indices in recent days plays the role of the seasonal factor (the liquidity is not very big) and a purely technical correction actions. I believe that in this year Americans will finish on a positive note,» concludes the analyst.