Stocks Slip on Wednesday, Tech Selloff and Facebook Hit
Multi-billion package could be approved before the holiday break. Facebook, Apple, Google and Tesla shares experience slippages
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- Multi-billion package could be approved before the holiday break
- Facebook, Apple, Google and Tesla shares experience slippages
Stocks Slip on Wednesday: Multi-billion package on the horizon
The US stock market ended Wednesday lower as the initial boost from the announced $916bn relief package proposal fizzled out. The dimming hopes for a stimulus bill put off the buying momentum that was gaining strength for the past couple of days. As the Dow Jones Industrial Average ended off 105 points or 0.35%, the S&P 500 slipped 29 points or 0.79% and the tech-heavy Nasdaq Composite closed down by 243 points or 1.94%.
Earlier on Wednesday, both the DJIA and the S&P 500 set all-time intraday high thanks to the news that a $916bn package proposed by the White House could be approved before the festive break. The offer by Treasury Secretary Steven Mnuchin was deemed not good enough. And even seen as “unacceptable” for House Speaker Nancy Pelosi and the Democrats as they insisted on more unemployment funding, among other demands.
The tech-heavy Nasdaq was hit the hardest as the index lost close to 2.00%. Shares of Apple, Google, and Microsoft were down by roughly 2.00%. Tesla shares fell by 6.99%, or $45.40 to a close of $604.48. The sell-off in the EV maker could have also been affected by the report of a JPMorgan analyst who valued Tesla at $90 per share. He considered that the company is dramatically overvalued by any conventional measure.
Facebook Accused of Maintaining a Long-Term Monopoly
Facebook shares slipped after the Federal Trade Commission and 48 state and territorial attorneys general accused the social media giant of illegally hurting competition through the acquisition of smaller rivals. The FTC claims Facebook has been maintaining a years-long monopoly. In addition to engaging in harmful actions targeted at eliminating potential competition. In the lawsuit, the agency is asking the court to force Facebook to unwind Instagram and WhatsApp acquisitions.
Facebook acquired Instagram for $1bn in 2012 and WhatsApp in 2014 for $19bn. Both platforms have been crucial for Facebook’s growth and market dominance. However, WhatsApp does not generate revenue. But it has the potential to do it as WhatsApp payments was launched in India a month ago. On the other hand, Instagram is expected to return $22.46bn in US ad revenue in 2021, while the fiscal revenue for 2020 is expected to be in the region above $84.1bn.
A look at the IPO sector
Over to the IPO sector, Airbnb IPO is expected to raise at least $3.5bn in its stock market debut on Thursday. As the company received a valuation of over $40bn to what will become one of the largest IPOs of 2020. Even amid a pandemic that has put a strain on travel activities. The vacation-rental company priced its initial public offering at $68 per share on Wednesday. They have thus topped the expected price range of $56 to $60. Airbnb had planned to do an IPO in early spring but was held back by the Covid-19 pandemic.
The Airbnb IPO comes a day after the American-based food delivery company DoorDash had its stock market entrance as the first day of trading saw DoorDash shares sprint over 85%. DoorDash stock closed the initial trading session at $189.51, essentially raising $3.4bn. As a result, the food delivery company now has a market capitalization of $60.2bn.
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