Amid the fall out from the Facebook Cambridge Analytica data abuse story in the UK and US a major reranking of American stockmarket rankings occurred this week.
After a 2.7% rise in Amazon’s share price onTuesday, followed by a fall of 0.14% on Wednesday, its market value was $US765 billion, took it just ahead of Alphabet ($US758 billion, down 0.2% on Tuesday and 0.6% on Wednesday).
Both remain well behind Apple’s market value at $US869 billion (down 2.7% on Wednesday).
Tuesday’s rise took Amazon’s gain in the past year to a massive 85% as investors re-rated its prospects and its expansion beyond its core ecommerce business into new markets such as healthcare, bricks and mortar retailing (Whole Foods) and logistics.
Fred Weiss, a managing director at CIBC Atlantic Trust, predicted that the impact from the Facebook affair would be felt throughout the online advertising world, not just among the large tech platforms. “It is not just tech,” he said. “It is clearly companies that have proprietary personal data that they are able to market to advertisers. Those are the ones that are vulnerable, not so much Amazon. It does very little on advertising and is not being impacted the same as Google and Facebook,” he told the Financial Times.
Amazon’s market value has risen by $US345 billion in the past year.
The change in in the rankings came as Wall Street looked through Monday’s tech sell off in the wake of the Cambridge Analytica story and its impact on Facebook to find new winners.
Facebook shares are down 9% so far this week, wiping close to $US50 billion in the company’s market value ($US492 billion on Wednesday)
Investors are now starting to look differently at tech companies – no longer believing in the primacy of revenue growth, user numbers and similar metrics. Now they are starting to be worried about tech stocks that are exposed to possible tighter regulations, especially in Europe and the UK. So Facebook, Snap, Twitter are top of the list, along with Alphabet (Google).
Shares in Alphabet, which also relies on access to large amounts of personal data to target its advertising, were nearly 3.5% this week. Twitter was also caught up in the social media sell-off, slumping more than 10% on Tuesday, but bouncing back by 4.4% on Wednesday to just over $US24 billion.
Besides being caught in the wake of the Facebook scandal, the messaging platform was hit by an accusation from an Israeli government minister that it had refused to take down comments supporting violence towards the country. Twitter did not immediately respond to a request for comment.
The Financial Times reported: “There’s definitely a risk, and it goes up with the situation at Facebook,” said Kevin Walkush, manager of the Jensen Quality Growth Fund, which owns shares in Google parent Alphabet. He questioned whether the “guilt by association” that had hit Alphabet would be limited just to advertising-related concerns, since many other companies rely on access to large amounts of user information. “What’s the data Amazon is collecting on us? We know it’s vast,” he said, according to the Financial Times report.
