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Why Alphabet, Netflix, and General Electric Stocks Fell Tuesday

By Daniel Sparks – Updated Dec 4, 2018 at 9:27PM

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These three megacap stocks fell about 5% or more.

Alphabet (GOOGL -7.68%) (GOOG -7.44%), Netflix (NFLX 1.07%), and General Electric (GE -0.18%) were all hit hard on Tuesday.

The three stocks' declines came as the market fell sharply. The S&P 500 fell more than 3%, and the tech-heavy Nasdaq Composite declined almost 4% on Tuesday. Pessimism in the market was probably fueled primarily by signs that a potential trade agreement between the U.S. and China may not be as certain as investors had thought. 

After watching market indices fall sharply in October and November, investors have been particularly jittery recently.

Executives walking into Google's headquarters entrance

Image source: Alphabet.

Here's a closer look at each of these three stocks' pullbacks.

Alphabet: down 4.8%

Shares of Alphabet, parent company of online search giant Google, finished the day down 4.8%. With only a slightly greater loss than the Nasdaq Composite's decline on Tuesday, the stock's sell-off is probably entirely attributable to the broader market decline.

The stock's decline on Tuesday means Alphabet shares have lost 12% of their value since Oct. 1. That's about in line with the Nasdaq Composite's 11% pullback during this timeframe.

Netflix: down 5.2%

Netflix stock was hit a bit harder than Alphabet, falling about 5.2%.

Shares of the streaming TV company have had a rough run recently. Tuesday's pullback brings the stock's decline since Oct. 1 to 28%. Much of its decline during this period is probably attributable to investors who have taken gains after the stock's sharp run-up. Case in point: Even after the stock's 28% decline since Oct. 1, Netflix shares are up an impressive 47% over the past 12 months.

Netflix relieved investor concerns about the company's member growth when it reported third-quarter results in October. New member additions during the quarter beat management's forecast for the period by nearly 2 million. Total member additions for the period were 6.96 million. A 25% year-over-year increase in paid memberships and a boost to average subscription prices helped revenue during the period rise 34% year over year. Despite this strong business momentum, many investors seem to be in agreement that it's a good time to take some profits.

General Electric: down 6.8%

General Electric stock took the biggest beating out of these three stocks on Tuesday. Shares slid 6.8%. While the decline was probably primarily driven by bearishness in the broader market, it's worth noting that the stock has been selling off faster than the market recently, as the company works through many challenges, including an underperforming oil and gas segment, a CEO swap, and news that the company plans to slash its dividend from $0.12 per share down to $0.01.

GE stock is down 39% since Oct. 1 and 59% over the past 12 months.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Netflix. The Motley Fool has a disclosure policy.

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