What Happened?
A number of stocks fell in the afternoon session after investors took some profits off the table as markets awaited signals on future monetary policy from the Federal Reserve's Jackson Hole symposium later in the week.
The downturn in the market was largely attributed to a significant sell-off in megacap tech and chipmaker shares. Nvidia, Advanced Micro Devices (AMD), and Broadcom all saw notable drops, dragging down the VanEck Semiconductor ETF. Other major tech-related companies like Tesla, Meta Platforms, and Netflix were also under pressure. A key reason for this trend is that much of the recent market gains have been concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Advertising Software company Zeta Global (NYSE: ZETA) fell 3.9%. Is now the time to buy Zeta Global? Access our full analysis report here, it’s free.
- Data Analytics company MicroStrategy (NASDAQ: MSTR) fell 8%. Is now the time to buy MicroStrategy? Access our full analysis report here, it’s free.
- Video Conferencing company 8x8 (NASDAQ: EGHT) fell 3.2%. Is now the time to buy 8x8? Access our full analysis report here, it’s free.
- Data Storage company DigitalOcean (NYSE: DOCN) fell 3.1%. Is now the time to buy DigitalOcean? Access our full analysis report here, it’s free.
- Advertising Software company DoubleVerify (NYSE: DV) fell 3.5%. Is now the time to buy DoubleVerify? Access our full analysis report here, it’s free.
Zooming In On MicroStrategy (MSTR)
MicroStrategy’s shares are extremely volatile and have had 77 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock dropped 3.2% on the news that a nearly 4% drop in Bitcoin's price weighed on crypto-related stocks, amid growing concerns over the company's valuation and fundamentals. The downturn in Bitcoin was linked to a hotter-than-expected Producer Price Index (PPI) report, a key measure of inflation that can influence investor sentiment towards riskier assets. This macro news compounded existing investor worries specific to Strategy.
MicroStrategy is up 12.7% since the beginning of the year, but at $337.75 per share, it is still trading 28.7% below its 52-week high of $473.83 from November 2024. Investors who bought $1,000 worth of MicroStrategy’s shares 5 years ago would now be looking at an investment worth $23,858.
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