Source: San Francisco Chronicle
By: Roland Li
Date: July 26, 2018
Facebook’s recent share plunge was one for the stock-books as the $119 billion decrease officially became the largest drop on Wall Street, even surpassing Intel’s $90 billion one-day drop in 2000. Facebook is one of the Bay Area’s largest employers and drives a local economies–what does this severe decrease in stock value mean for the Bay? According to the The Chronicle, the plunge will not “hurt the Bay Area economy.” Coupled with their “$42.3 billion cash reserve,” and with a planned 20,000+/- jobs being added to the security team, Facebook will continue to “boost the local economy.”
Other economists worry that the drop in price could indicate a pending correction in the market. However, with Amazon’s massive increase in Q2 earnings, it may be too early to predict if Facebook is suffering from an overall market dip, or its own public relation woes.
According to Gary Schlossberg, a senior economist at Wells Fargo and quoted in the Chronicle article, the market has experienced a “mild deterioration in some of the fundamentals driving the market. The question is: how much will U.S. growth slow and with it earnings growth? A lot of strength in earnings has to do with corporate tax cuts. We need to see how aggressively the Fed will move interest rates. There could be a gradual turn toward ad less friendly environment for the stock market.”
Time will tell.