Big-cap tech stocks are typically having a good week, while numerous smaller, richly-valued names are selling off.
The Nasdaq has moved less than 0.5% so far today, but lots of well-known tech names have seen far bigger rate swings.
On one hand, the proverbial FAANG stocks, which have usually underperformed the Nasdaq given that September, have moved higher this week.
Facebook ( FB) – Get Report and Netflix ( NFLX) – Get Report are each up about 4% from last Thursday’s close, Apple ( AAPL) – Get Report is up about 3.5% and Amazon.com ( AMZN) – Get Report is up about 4.5%. Alphabet ( GOOG) – Get Report and Microsoft ( MSFT) – Get Report are each up a little over 1%.
Amazon might be getting a boost from a Monday news release trumpeting the company’s vacation season sales. To name a few things, Amazon divulged that its holiday sales including market sellers rose over 50% every year.
Apple, which has made fresh highs this week, appears to still be getting a boost from recently’s Reuters report that it’s dealing with an electrical vehicle. Continued signs of strong iPhone need may also be assisting.
But while the tech giants are having a good week, the same can’t be stated for numerous Robinhood favorites such as high-multiple web, cloud software, and the electric car plays.
Zoom Video Communications ( ZM) – Get Report, which sold off last week after a report about plans to release e-mail and calendar apps raised concerns about competitive pressures, is down another 6% today. Likewise, online TELEVISION service company FuboTV ( FUBO) – Get Report has dropped 16% this week, after getting clobbered last Thursday thanks to a really bearish LightShed Partners report.
C3Ai ( AI) – Get Report, which was bid as much as a nosebleed evaluation in spite of seeing major COVID-related sales pressures this year, is likewise down 16%. Snowflake ( SNOW) – Get Report is down 6%, Palantir Technologies ( PLTR) – Get Report is down 11% and (thanks to a big Tuesday selloff) electrical automobile battery developer QuantumScape ( QS) – Get Report is down 14%.
What’s triggering this tech rotation? Year-end trades produced tax and portfolio rebalancing factors that might be playing a role. Likewise, Tesla’s ( TSLA) – Get Report entry into the S&P 500 a week back is a prospective driver.
The fact that S&P 500 index funds had to trim their positions in FAANG stocks and Microsoft ( MSFT) – Get Report to help include Tesla was a headwind in recent weeks for the shares of numerous big-cap tech names, and one which has now disappeared.
On the other hand, Robinhood favorites may be pressured by the growing variety of alarm bells being raised by analysts and others about the huge valuations choose tech companies favored by retail financiers are now being granted.
Over the weekend, The Wall Street Journal ran a piece keeping in mind that U.S. margin debt has risen above $700 billion for the very first time in history. The WSJ likewise reported (pointing out data from Options Clearing Corp.) that daily options agreement volume has risen 48% this year, which inflows for leveraged and inverse ETFs have reached their highest levels considering that 2008.