To further support my theory, I note that LinkedIn also fell today by 5.6%. This was not a fall as steep as that of Zynga, but of LinkedIn is not as closely intertwined with facebook as Zynga.
GOOG dropped by 3.6%, that's around $7.1B in market cap which is almost half of the entire Facebook offering - do you suppose this was driven by people who really wanted Facebook exposure, too?
A lot of tech stocks declined today, not just GOOG, though GOOG declined quite a lot. Even (Adobe) ADBE declined by 2.19%.
Possible explanation: If you were a big institutional fund manager with a large portfolio, would you put your money in thousands of small-cap companies or a few large-cap companies? When an opportunity like FB arises and you want to get in, what would be the easier way to get the liquidity needed to buy FB? If you don't have very sophisticated trading and portfolio management technology, one of the easiest ways to get the liquidity is to sell the large-caps first, and GOOG could be one of them.
Another possible explanation: GOOG and FB are perceived to be enemies/antagonistic. So, when one stock has a positive event (IPO that provides lots of liquidity), the other stock is impacted. This is a psychological explanation. I can't prove it.
I believe there is a similar reason for Google. I don't think that many people held Google as proxy for Facebook, but I am sure there are large funds that devote a certain percentage of their money for internet large cap stocks. Well, there aren't many internet large cap stocks, so Google held a large part of this money. When another internet large cap stock appears, the funds would sell some Google in order to get a proper exposure to Facebook. And thus Google falls.
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To further support my theory, I note that LinkedIn also fell today by 5.6%. This was not a fall as steep as that of Zynga, but of LinkedIn is not as closely intertwined with facebook as Zynga.
GOOG dropped by 3.6%, that's around $7.1B in market cap which is almost half of the entire Facebook offering - do you suppose this was driven by people who really wanted Facebook exposure, too?
A lot of tech stocks declined today, not just GOOG, though GOOG declined quite a lot. Even (Adobe) ADBE declined by 2.19%.
Possible explanation: If you were a big institutional fund manager with a large portfolio, would you put your money in thousands of small-cap companies or a few large-cap companies? When an opportunity like FB arises and you want to get in, what would be the easier way to get the liquidity needed to buy FB? If you don't have very sophisticated trading and portfolio management technology, one of the easiest ways to get the liquidity is to sell the large-caps first, and GOOG could be one of them.
Another possible explanation: GOOG and FB are perceived to be enemies/antagonistic. So, when one stock has a positive event (IPO that provides lots of liquidity), the other stock is impacted. This is a psychological explanation. I can't prove it.
I believe there is a similar reason for Google. I don't think that many people held Google as proxy for Facebook, but I am sure there are large funds that devote a certain percentage of their money for internet large cap stocks. Well, there aren't many internet large cap stocks, so Google held a large part of this money. When another internet large cap stock appears, the funds would sell some Google in order to get a proper exposure to Facebook. And thus Google falls.