UPDATED with closing prices. The stocks of major tech companies, especially those of the major social media players, pulled back sharply today amid renewed fears that federal regulators could finally rein in their fast-growing businesses.
Snapchat parent Snap Inc. has been the hardest hit, reaching a new 52-week low of $7.61 before closing down 5% for the day at $7.80. Facebook, despite owning Instagram, the social network with the best reputation on Wall Street, slipped 2% to $158.85. Twitter dropped nearly 3% to $28.23.
The damage was not contained to social media. This was a day when the Dow tumbled as many as 357 points before improving to finish off 200, and the Nasdaq had its worst single-day performance since June 25, dropping nearly 2% to 7,879. Tech giants like Apple, Amazon and Alphabet, which owns Google, all dipped well into the red. Netflix stepped back 3.5%. Roku, whose shares had doubled since April amid the streaming video boom, fell a dramatic 8%.
While there are macroeconomic reasons for the declines, such as ominous Treasury statistics on government bond yields, Anthony DiClemente, a veteran tech analyst with Evercore ISI, issued a report that rattled investors. He warned that the worst could be yet to come, especially for social media giants like Facebook, Snapchat and Twitter, all of whose 12-month price targets he lowered.
“While advertising-driven internet stocks have under-performed in recent months … we worry that regulatory concerns are unlikely to dissipate in the near term,” DiClemente wrote. “While these concerns are at least partially priced into stocks, they may continue to weigh on the largest internet names.”
Tech stocks have propelled the broader markets to several years of gains, but there are increasing concerns on Wall Street that the rally is becoming overextended on a technical basis. Also, the companies have faced harsh scrutiny from the federal government after data manipulation tactics have been exposed and their platforms have been hijacked by political partisans and foreign elements looking to sway U.S. elections.
Facebook and Twitter executives testified before a Senate committee last month that is examining their business practices. When a Google rep declined to appear, his empty chair got a tongue-lashing worthy of Clint Eastwood at the Republican convention.
President Donald Trump is planning a summit meeting with tech leaders, which will enable Administration officials to air concerns such as the oft-aired charge of anti-conservative bias. Trump has also frequently tangled with Amazon — via Twitter, of course.