Markets Fall From Morning Highs as Facebook's Purchase Makes Waves

Facebook purchase of Oculus is not only hurting its own stock, but may be pulling Microsoft lower.

Mar 26, 2014 at 1:00PM
Longview Fool Image

As of 1 p.m. EDT, the Dow Jones Industrial Average (DJINDICES:^DJI) was up 47 points, or 0.29%, the S&P 500 was higher by 0.26%, and the Nasdaq was down 0.25%. All three indexes opened much higher, but the markets dropped throughout morning trading. One reason could be today's Census Bureau's durable goods report, which found that orders for such products rose just 0.2% last month; economists predicted a 0.3% rise. This figure indicates that the U.S. economy is not as strong as economists might believe.

Shares of Garmin (NASDAQ:GRMN) are up nearly 3% after an analyst at Citigroup upgraded the stock from neutral to buy and increased the price target to $65. Analyst Jeremy David believes that Garmin's new fitness device, the Vivofit, will be a huge success with the fitness community. The device tracks the user's steps, distance traveled, and calories burned, and it has a battery life of more than one year. David also increased his 2014 revenue prediction for Garmin by $98 million, to $2.73 billion, and bumped his earnings estimate higher from $2.54 to $2.77 per share. If the analyst is correct, today's move is likely just the start of a big rise for Garmin.  

Fb

One big loser today is Facebook (NASDAQ:FB) as shares are down 4%. The drop comes following the announcement that Facebook will acquire virtual reality headset maker Oculus for $2 billion. Facebook CEO Mark Zuckerberg said virtual reality could be the next social media and communications platform. The social media giant is taking a risk in acquiring a technology that is not mainstream and may or may not be adopted by the general public. Furthermore, while one could say that Facebook only paid $2 billion, much less than the $19 billion it spent on WhatsApp, that is still a lot of money on a gamble.  

Shares of Microsoft (NASDAQ:MSFT) are down 1%. The move may be related to the Facebook acquisition, as some have hinted Oculus would have been a great company for Microsoft to pick up in order to incorporate the technology into its existing offerings. Another reason for the decline today could be the recent price changes for the Xbox One game console. Microsoft started by bundling the unit with a game for $500, which is about $60 below normal cost. Then a few retailers cut an additional $50 off that price, making it comparable to the price of a PlayStation 4 and a game. Now Microsoft itself is offering the same price for a limited time. These price changes make it clear that a full price cut on the Xbox One is likely soon, which some may suspect to be a bad thing for the company as the margins on the device will likely fall. Others will argue that more units will be sold if the price is the same as the PS4, which would increase revenue but at a lower margin.  

More Foolish insight

3 stocks to own for the rest of your life
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

Matt Thalman owns shares of Facebook and Microsoft. The Motley Fool recommends Facebook. The Motley Fool owns shares of Facebook and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers