Why the Crash in Facebook and Twitter Matters to Investors

Why the Crash in Facebook and Twitter Matters to Investors, by Clint Siegner.

Social media giants Facebook and Twitter crashed by roughly 20% after admitting subscriber growth was way behind projections and revenues were lower than expected. There are a couple of reasons that metals investors may want to take note.

The first is that technology companies in general may finally be reaching the point where they have trouble meeting investors’ sky-high expectations. … Valuations and expectations are off the charts, and it wouldn’t be too hard for the markets to disappoint investors more generally.

Regardless of whether the selloff in the social media giants is signaling trouble ahead for stocks in general, it does fit the pattern of declining confidence in our institutions. People have learned that Facebook and Twitter share an agenda with the radical political left. Content and personalities which aren’t aligned with that agenda cannot expect fair treatment.

And all users must worry about their privacy. Massive data breaches are a regular occurrence, and these companies have demonstrated an eagerness to share user information. Anyone with an account is right to worry that personal info, photos, posts, and search history will be eventually handed off to other companies and even the government.

To make matters worse, these firms are now getting pressure from the European Union to police the content on their platforms. Any government demands that websites move even further away from free speech will further erode users’ confidence.

All the growth in stock markets this year has been due to the dozen big tech stocks (including three Chinese ones) — without them, the markets would be slightly down for the year.

That the tech giants are politically biased has spread from the political pond to investor world. Now “everyone knows.”