March 28, 2018 / 9:27 PM / 2 months ago

Breakingviews - Rocket-fueled stocks finally feel the burn

NEW YORK (Reuters Breakingviews) - A collection of rocket-fueled stocks are finally feeling the burn. Amazon, Tesla and Facebook have shed billions of dollars in recent days on concerns investors once largely ignored.

A remodeled version of the SpaceX Falcon 9 rocket lifts off at the Cape Canaveral Air Force Station on the launcher’s first mission since a June failure in Cape Canaveral, Florida, December 21, 2015. REUTERS/Joe Skipper

Jeff Bezos’ e-commerce behemoth lost as much as $50 billion or so in market value at one point on Wednesday, a rarity for a company more used to bumps in the other direction. The selloff may have owed something to a report in Axios, citing unnamed sources, that U.S. President Donald Trump is “obsessed” with Amazon and is contemplating changing the company’s tax status.

Yet the nearly $700 billion firm led by Bezos, who personally owns the Washington Post, another of the president’s targets, has sailed through such squalls in the past. When Trump tweeted in August that Amazon was damaging “tax paying retailers,” the Seattle-based company’s shares barely budged.

Elon Musk’s Tesla, meanwhile, is no stranger to questions about its heavy cash needs, failures meeting ambitious production goals, or the role of its software in a few high-profile car wrecks. So although Moody’s Investors Service downgraded the company’s credit rating on Tuesday and federal watchdogs opened probes into a recent crash, it’s unusual that shareholders - who as recently as Monday valued the money-losing electric-car maker at over $50 billion, a whopping four times last year’s sales - sent Tesla’s stock tumbling more than 8 percent by Wednesday afternoon after a similar beating the day before.

Facebook, too, once seemed impervious. A historically carefree approach to user data, wonky advertising metrics and potential Russian interference in the 2016 U.S. presidential election scarcely registered with shareholders. It wasn’t until news outlets revealed Facebook knew about unauthorized sharing, several years ago, of data on 50 million users that Mark Zuckerberg’s company got the skepticism it deserved from investors, with nearly $100 billion wiped off its value in the past 10 days.

Share prices may whipsaw again for these firms. Yet market skittishness based on the kind of information that was once brushed aside could equally suggest that investors are finally opening their ears.

Breakingviews

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