WASHINGTON. It looked pretty grim for tech stocks as Tuesday’s opening bell approached. Online shoppers hit Amazon’s widely touted Amazon Prime Day promotion hard. The stampede caused the company’s retail website to experience serious connectivity issues Monday. Also on Monday, Netflix (trading symbol: NFLX) reported great profit numbers after the closing bell. But the Netflix new subscriber tally disappointed Wall Street. Badly.
Epic Fails: Amazon Prime Day fiasco, Netflix new subscriber disappointment
Given the Netflix new subscriber number fail, investors subsequently tanked the stock in knee-jerk after-hours trading action. They took NFLX shares down over 50 points, a whopping decline.
NFLX shares opened horribly Tuesday morning, hitting a formal low of $344 per share before rebounding some 30+ points as we write this report at 2:15 p.m. ET or thereabouts. That’s still a formal decline of 5.6 percent, give or take.
Meanwhile, due to the equally unnerving Amazon Prime Day fail, Amazon shares (AMZN) also swooned at the opening bell.
“Amazon’s website suffered a massive glitch during the worst time possible: the start of Prime Day, its largest shopping event of the year. And it lasted for hours.
“As traffic funneled to Amazon.com Monday at 3 p.m. ET, the start of Prime Day, most users looking for deals were instead greeted with images of dogs and a screen that read ‘SORRY something is wrong on our end.’ Some users were unable to log into their accounts, while others were unable to use the search function on the website to browse items. Meanwhile, AWS [Amazon Web Services] had its own snags.”
As if luck would have it, after we wrote yesterday’s column on “Amazing Amazon,” this columnist’s spouse tried to place an Amazon Prime Day order at around 4 p.m. Tuesday and finally gave up an hour later after experiencing the same “SORRY” message. At least they admitted it was their fault.
But the retail and cloud computing giant quickly rebounded after sustaining an opening bell hit. It currently stands at nearly $1847.00 per share, up a surprising $24.13 points (1.3 percent) on the day. And, oh yeah, they eventually fixed the glitch and Amazon Prime Day is officially back up and running.
Trouble in FANG Wonderland?
Analysts worried beyond measure that both Internet giants would screw up active traders’ love affair with FANG stocks (Facebook [FB], Amazon, Netflix and Google, aka Alphabet [GOOG and GOOGL]) and kill the tech heavy S&P 100 and NASDAQ averages.
Typical was this analyst comment to CNBC.
“For the FANG stocks, it will be a tough day,” said Peter Boockvar, chief investment officer at Bleakley Financial Group. “They were the poster boys for outperformance and when you get outperformers like these guys, that drives up valuations. When the valuations are this high, there is no room for error.”
“The other FANG members also fell in premarket trading. Shares of Facebook were down 1 percent. Amazon shares also fell 1 percent amid glitches during the start of the company’s annual Prime Day. Google-parent Alphabet fell 0.7 percent.”
At this point Tuesday afternoon, however, analysts seem to have gone overboard on fear and negativity. All the FANG stocks (save for Netflix) are up nicely after absorbing an opening bell hit. And NFLX shares seem to be stabilizing, to the point where at least one analyst urged investors to pick up shares on today’s big dip. Maybe the brouhaha surrounding those Netflix new subscriber numbers will ebb and investors will pay more attention to profits. As they should. We’ll wait and see. This stock is still too expensive in our book.
In the Oil patch
On other fronts, oil was a worry Monday, as per-barrel prices took a hit. But crude oil rebounded a bit today, although it’s currently off 7 cents bbl. for WTI and 15 cents bbl. for Brent. Oil bulls continue to worry. But in the intermediate term, the idiot governments of both Iran and Venezuela won’t be pumping or selling much oil, which should keep crude prices fairly high. Realistically, we don’t see much changing in that regard any time soon. Plus, there’s always that tendency of what’s left of Libya, post-Hillary Clinton, that can still pump oil in that currently ungoverned desert mess.
Some investor thoughts on the Trump/Putin summit hype
Wall Street in general looks okay Tuesday, at least as we write this piece. The Dow is up 53.74 points (0.21 percent), the S&P 500 is gaining 12.65 (0.44 percent) and the NASDAQ is up 52.89 points (0.68 percent).
True, these numbers don’t set the world on fire. But, given the headline risk savaging that greeted Monday’s Trump/Putin presser, you’d think Wall Street would hit that big SELL button en masse. But that failed to happen, indicating Wall Street A.) doesn’t care; and B.) has chosen to move along and leave fake conspiracy theories behind.
The press won’t let its latest anti-Trump memes go for awhile, which is probably just fine with the President. The hyperventilating provides useful cover for the Kavanaugh Supreme Court appointment to move on through. Plus, in the main, businesses continue to profit mightily as Trump continues to trash hundreds of needless, business-crippling Obama-era rules.
The media – and some businesses – continue to express apprehension with regard to the administration’s escalating and now worldwide tariff battle. Trump, however, is no Herbert Hoover. He regards these actions as short term negotiating leverage, not as a permanent anti-free trade regime.
A bullish course. For today, anyway
Of course, whether or not the President can control the tariff monster to produce the desired results remains to be seen. For now, however, most traders and investors continue to be bullish, at least near term. Current Q2 earnings numbers generally won’t be affected by the tariff battles. But Q3’s and Q4’s might. So we could see some wariness creep into trading patterns as autumn approaches.
For that reason, if we see signs of negativity creeping in late summer, we might want to start taking profits before Mr. Market decides to take them away again, like he did this past spring. Meanwhile, both Amazon’s apparent recovery after its Amazon Prime Day fumble, plus heavy buying in still hard hit Netflix shares despite that Netflix new subscriber tally fail show that this summer’s very weird bull market is not quite ready to say sayonara just yet. #
—Headline photo. Screen grab from NYSE video on the history of the exchange’s opening bell tradition.