Tech News Today for Financial Advisors: Amazon, Meta, and, of Course, Twitter
The wrenching volatility continues in the wild tech space. After a plunge in the
Invesco QQQ Trust
(QQQ) on Friday, there was a solid 2% gain in early trading Monday. But unfortunately, the gain has fizzled.
Nowadays the tech market seems more for quick-action traders. As for long-term investors, you really need a strong stomach.
OK then, what’s some of the news for financial advisors to key in on? Here’s a look:
Amazon Split: It’s been an uncharacteristically bad year for the e-commerce giant, whose stock is off by nearly 27% so far in 2022. Monday morning, the company started trading at a new adjusted stock price following a 20-for-1 stock split, which is
fourth since its 1997 IPO.
Financial advisors know that such events don’t change the company’s fundamental value. It’s just a change in the number of shares outstanding.
But Wall Street still seems to like the move, with Amazon stock up about 2%. One tangible benefit: The lower price of a single share will make it easier for retail investors to buy the stock, which could add fuel to the demand.
Also, the stock split may mean that Amazon could be included in the Dow Jones Industrial Average. The company is certainly a big part of the economy. The lower stock price means there will not be a disproportionate impact on the index if it is added.
Meta Ticker Change: The rebranding of Facebook to
(FB) has certainly been a noteworthy event in big tech. It has ginned up lots of interest in the metaverse, which is an immersive virtual world.
Meta CEO Mark Zuckerberg is betting billions on this vision. But it is unlikely to drive growth anytime soon. On the latest earnings call, Zuckerberg said that the metaverse is “laying the groundwork for a very exciting 2030.” Maybe this helps explain why the shares are off about 43% this year.
As for the latest on Meta, the company will change its ticker symbol to “META” on June 9. It’s another reminder that the company is doing a major rethinking of its business.
Twitter Saga: Elon Musk’s buyout of
(TWTR) has more twists and turns than a James Patterson thriller. The latest is that he seems to be getting cold feet on the deal, according to a letter Musk sent to Twitter. His main concern is bots and spam on the platform. He says he will not move on the deal until something is done about the problem.
shares fell about 4% on the news to $38 before recovering some of the losses and closing 1.5% lower. Musk’s offer price is $54.20 a share.
The irony is that bots and spam have been—for years—a well-known issue for Twitter. The company has even disclosed this in SEC filings. Its estimate is about 5% of traffic.
But of course, Musk seems to be in his own universe—or metaverse. He thinks the percentage is much higher.
This may not matter if Twitter files a lawsuit in Delaware to enforce the purchase agreement. Such a lawsuit certainly would be among the most interesting trials in the court’s history.
Tom Taulli is a freelance writer, author, and former broker. He is also an enrolled agent, which allows him to represent clients before the IRS.