Meta’s sharp decline points to rising political risks among the Big Seven
On Monday morning, former US President Trump said in an interview: “I think Facebook is the enemy of the people.” As a result, Meta plummeted 4%, underperforming the Nasdaq index.
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Trump and Biden will face off again, confirmed
Although there was a rebound the next day, this may be a reminder to investors that election risks are also important to them.
With only eight months left before the U.S. presidential election, Trump and Biden are set to face off again. When any candidate mentions some public company, investors need to pay attention.
Now, investors know the days as well as everyone else. This means that as we enter 2024, strategists are talking about “election risk” when talking about the direction of almost anything. They always have something to say, and as Carson Group chief market strategist Ryan Detrick recently outlined, the election is generally good news for U.S. stocks.
There is rarely better news for the S&P 500 than the current president’s re-election bid. Since that happened ten times in 1952, the S&P 500 has never declined in an election year under a new president, and the average return has remained at 12.2%.
Since that happened ten times in 1952, the S&P 500 has never declined in an election year under a new president, and the average return has remained at 12.2%.
Although the S&P 500 always rises in election years like 2024, this does not mean that every component of the index does not have to worry about political risks during this year.
In an interview with CNBC, when asked about his views on Congress’ recent ban on TikTok, Trump said: “…without TikTok, you can make Facebook bigger, and I think Facebook is the enemy of the people.”
Trump’s anti-Meta is nothing new
Trump’s Facebook and Instagram accounts were suspended after the Jan. 6 riots and were not restored until last year. During this time, Trump began posting on his own social network, Truth Social, which went public through a merger with Digital World Acquisition Corp. (DWAC). DWAC shares fell 2% on Monday, but have more than doubled since the beginning of the year.
Meta itself is one of the most important upward drivers of the overall market this year.
According to Yahoo Finance data, Meta’s market value growth accounted for 12.3% of the S&P 500’s total market value growth as of last Thursday, and the social media giant’s market value has also increased by US$1.3 trillion from approximately US$900 billion at the beginning of the year.
Although Trump’s comments on Monday were against Facebook, what he dared not say directly was that he was supporting TikTok’s continued use in the United States. Meta stock’s reaction reflected two challenges that a Trump administration would pose.
The first one is very simpleother things being equal, companies would not want a current or incoming president to call them an “enemy of the people.”
The second question isone wonders how much of Meta’s rise this year is due to a potential ban on TikTok giving the company greater influence, as Trump has said.
Studying how these issues, or issues such as artificial intelligence and the metaverse, will put pressure on Meta’s stock on Monday, Tuesday, or any day in the future is also why the market is full of charm.
Immediate disagreements about what is important or not important to a given company, and how that may or may not affect the value of that company’s future discounted cash flows, is what forms markets.
Tracing the origins of these controversies, from research reports to management interviews to comments from former presidents, shows that there is always news in the modern financial markets.
2024-03-13 06:24:44
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