Elena Popina
BloombergMon, 03 Jun 2019 18:49 UTC
© Bloomberg
A wave of antitrust probe headlines on Facebook Inc. and Google parent Alphabet Inc. just yanked about $137 billion from FANG (Facebook, Amazon, Netflix, Google) stocks' market values.
Some $41 billion evaporated from Facebook on Monday as a person familiar with the matter said the U.S. Federal Trade Commission will oversee antitrust scrutiny into whether the firm's practices harm competition in the digital market under an agreement with the Justice Department. That added to early-morning losses as the group was hammered by a report the Justice Department was preparing an antitrust investigation into Google. Some $52 billion was erased from Google's market value as the stock fell 6.9%, on pace for the lowest close since Jan. 3.
The move comes as politicians from both parties face increasing pressure to apply tougher regulation on tech and telecom giants like Alphabet and Facebook Inc. and even break up the companies -- which are among the largest in the U.S.
For investors, tougher regulation most likely means a negative impact on profits, making it harder to justify the rich valuations of some of the world's highest-flying stocks.Two FANG megacaps that were not directly targeted -- Netflix Inc. and Amazon.com Inc. -- also sold off sharply. Amazon plunged 4.7% as about $41 billion was wiped out of the e-commerce giant. Netflix lost $2.5 billion from its market value as the stock fell 1.6%.
Comment: From
Reuters:
Alphabet shares slide 6% on possible DoJ antitrust probe
June 3, 2019 / 6:07 PM
Alphabet Inc's shares closed 6% down on Monday following reports that the U.S. Justice Department may investigate Google for hampering competition.
The potential investigation represents the latest attack on a tech company by the Trump administration, which has accused social media companies and Google of suppressing conservative voices on their platforms online.
Alphabet's market capitalization was reduced by $54 billion as its shares recorded their biggest drop outside earnings since April 2011. Facebook Inc closed 7.5% down, while Amazon.com Inc fell about 5%.
Amazon shares were also pressured by news that the company could face heightened antitrust scrutiny under a new agreement between U.S. regulators, which puts the e-commerce giant under the trade commission's watch.
Evercore ISI analyst Kevin Rippey cut his price target on the Alphabet stock by $50 to $1,200, the second lowest on Wall Street and well below the median price target of $1,350...
Bank of America Merrill Lynch analyst Justin Post said a possible investigation could lead to a breakup.
"To break up Google, the DoJ would likely have to file a lawsuit and convince judges that Google has undermined competition. It is very rare to break up a company but not unheard of," Post wrote in a note...
The U.S. Justice Department has jurisdiction for a potential probe of Apple Inc as part of a broader review of whether technology giants are using their size to act in an anti-competitive manner, two sources told Reuters.
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Comment: From Reuters: See also: