Friday was a bad day for big-tech stocks. It was especially hard on Facebook.
The social media company fell 6.3% to $124.95 a share, a harder fall than any of the other FAANG stocks and more than double the 3% decline in the Nasdaq Composite. The decline came in the wake of a Bloomberg report that Facebook was developing a stablecoin—a cryptocurrency pegged to the dollar—to enable digital payments in WhatsApp.
Stablecoins are designed to offer the benefits of digital currencies with less of the volatility seen in Bitcoin and other cryptocurrencies, since they are tied to assets such as the dollar or gold. Facebook’s stablecoin will be rolled out first in India, the report says.
Bloomberg also noted that this year has seen as many as 120 stablecoin projects, with some of those projects shutting down or facing controversy. Facebook, however, has deep pockets and lobbying clout that many startups lack, along with PayPal veteran David Marcus overseeing its blockchain initiatives.
Two analyst also issued critical notes on Facebook. German-based DZ Bank downgraded the stock to sell from hold and its price target to $115 a share from $145 a share. Meanwhile, Needham & Co. cut its price target for Facebook’s stock to $170 a share from $215 a share.
Needham’s Laura Martin said in her research note that she expected “minimal” earnings growth from Facebook in 2019 and 2020, while underscoring “rising risks associated with growing global scrutiny, which may drive additional litigation costs and/or regulatory oversight.”
Facebook and other tech stocks helped lead the stock market down on another selloff Friday, and the Nasdaq Composite fell into bear market territory. Facebook is now down 43% from its all-time high reached in July.