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Sharp fall in Facebook and Paypal
04 Feb 2022 (654 views)  

Facebook dropped 26% 0n 3 Feb 2022, wiping off $230 billion in its market cap.

Its revenue forecast of $27 billion to $29 billion for the first quarter fell below analyst expectations of $30.15 billion, according to Refinitiv.

The price earning ratio of this stock is 17.27 times, wiping off $50 billion in its market cap.

Report

Paypal dropped 25% on 2 Feb 2022, wiping off $50 billion from its market cap.

It reported mixed results for the fourth quarter. Earnings per share of $1.11 missed the $1.12 expected. It beat on revenue estimates, though, reporting $6.92 billion vs. $6.87 billion expected, according to Refinitiv.

Its price earning ratio is 29.87 times.

Report

TKL's observation

The drop in revenue is quite small. It should normally be ignored. However, the stock investors took the opportunity to sell the stock, causing a large drop.

The real reason behind the fall is that the US stocks are generally overpriced. The price earning ratio of the market is about 35 times, which is more than twice of the long term average. 

The other stocks with high price earning ratios are likely to fall when there is negative news for the stock or for the market. 

Note - this is a personal opinion. It is not financial advice. 

Tan Kin Lian


Sharp fall in Facebook and Paypal
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Facebook dropped 26% 0n 3 Feb 2022, wiping off $230 billion in its market cap.

Its revenue forecast of $27 billion to $29 billion for the first quarter fell below analyst expectations of $30.15 billion, according to Refinitiv.

The price earning ratio of this stock is 17.27 times, wiping off $50 billion in its market cap.

Report

Paypal dropped 25% on 2 Feb 2022, wiping off $50 billion from its market cap.

It reported mixed results for the fourth quarter. Earnings per share of $1.11 missed the $1.12 expected. It beat on revenue estimates, though, reporting $6.92 billion vs. $6.87 billion expected, according to Refinitiv.

Its price earning ratio is 29.87 times.

Report

TKL's observation

The drop in revenue is quite small. It should normally be ignored. However, the stock investors took the opportunity to sell the stock, causing a large drop.

The real reason behind the fall is that the US stocks are generally overpriced. The price earning ratio of the market is about 35 times, which is more than twice of the long term average. 

The other stocks with high price earning ratios are likely to fall when there is negative news for the stock or for the market. 

Note - this is a personal opinion. It is not financial advice. 

Tan Kin Lian