Tech stocks were on sale yesterday — and people bought
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Tech stocks were on sale yesterday — and people bought
If all of a sudden there were a huge sale on what are normally out-of-reach, expensive goods, you’d probably go shopping, right?
Well, that sale happened yesterday, when Black Monday became a two-fer: A massive selloff on Wall Street, and also an opportunity for bargain shopping, Black Friday style. Tech stocks had huge and high-profile markdowns, and today they’re leading the rebound. That’s because, in some ways, Netflix, Apple and Google are like the Chanel, Hermes and Prada of Wall Street: They never go on sale, so when they do? You get in line.
By midday, Netflix was up nearly 10 percent, Apple over 5 percent, Google 4 percent and Facebook nearly 5 percent. Tesla, Amazon and Twitter were also big movers. Tech stocks had been among the hardest hit in Monday’s selloff, especially Netflix, which has been on an absolute tear in recent months. The tech-heavy Nasdaq suffered its first 10 percent drop since November 2012.
But why were these stocks hit so hard in the first place? Jan Dawson of Jackdaw Research says tech stocks probably got caught up in the overall frenzy, and because they’re the big names in many big indices, they suffered hardest.
“It’s kind of baffling, in some ways,” he says.
And Dawson says the tech buyback has as little to do with reality as the selloff.
“So much of it seems to be reaction to what other people are doing,” Dawson says. “It’s not as if there’s some underlying concern about these businesses versus some other view just discovered today.”
Netflix specifically, he says, has no reason to be a volatile stock.
“Its underlying financials are fantastic, it’s growing rapidly, its DVD business covers the cost of expansion internationally,” Dawson says. “There’s no new reason in the last couple weeks to think Netflix is going to have a hard time.”
So, tech stocks are really just the big-name representatives of whatever mysterious forces are driving Wall Street’s sudden plunge and delirious rebound: a combination of emotion, swarm behavior and fear of missing out. But if you were planning to stock up on Apple stock while it was on sale, it looks like you’ve missed your chance until the next Black Monday.
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