The stock market has seen some absolutely insane volatility in the past few days with both record losses and record gains in consecutive days. Thursday, Meta (Facebook) saw the biggest drop in value ever to happen to a publicly traded company. This came after its stock fell some 25% during the Wednesday after hours, the time after the major stock exchanges have closed where buyers and sellers can still make direct trades.
Following that mind-blowing drop of some $200 BILLION dollars in value, it was not surprising to see tech stocks look shaky on Thursday the day after. But that was only until a perhaps even crazier after hours market kicked in.
With NASDAQ, the most tech-heavy index, being down more than 3. 7% during the day and thus continuing its negative trend so far in 2022, amazon and snapchat were both down 8% and 24% respectively when the markets closed on Thursday. These are both huge drops by normal standards for companies their size. But this is where it got crazy. With amazon then releasing impressive numbers shortly afterward, showing that they had basically doubled their profitability in Q4 compared to the year before, its stock went surging up 25% in the after hours. Thus putting it at a positive 17% for the day after having been down 8%. In doing so, amazon set å new record for the most value gain in a single day. The opposite of what Meta did the day before.
Snapchat didn't disappoint in the after hours either, surging up an unbelievable 58% to bring it to 34% up for the day after closing down 24% an hour earlier.
Amazon and Snap both seeing insane after hours gains compared to their closing values just minutes before.
This volatility is completely unheard of in companies this size. It's even unheard of in crypto to see more than 200 billion in valuation change in less than an hour like that.
Going into this year, I wrote in multiple channels that I expected å very volatile and action-packed year. And while that obviously bring some opportunities with it, my strategy is just to sit still and DCA. However, this level of volatility ought to be worrisome. It’s as if any failure by the big companies to meet targets that are dependent on an infinitely inflating growth curve is destined to eventually make this bubble pop. And if any signs of failure can cause a drop in value of one of the world’s biggest companies by 25%, how much can the main indexes go down when we eventually do hit the glass ceiling?
I must say it all looks very fickle at this point. And while the volatility this week was interesting to watch, I think it’s also a very clear warning sign that things can go bad much faster than anticipated when or if it does.
