What Caused Tech Stocks to Plunge?

NEW YORK (TheStreet) -- Twitter (TWTR) is an amazing tool. Not only does news break on Twitter, changing the way people consume and  react to news, but the micro-blogging site lets you have conversations with people you would never ordinarily meet, and discuss a wide array of topics. Perhaps the most esoteric of all these is finance.

This past Friday, Kara Swisher of Re/Code put out an article on the recent sharp drop in some publicly traded tech stocks, including Twitter, Facebook (FB), Netflix (NFLX), Tesla (TSLA), Google (GOOG) and a host of others. The gist of her article was that very few people, if anyone, have any idea what caused the recent sharp drop in publicly traded tech companies.

A passage from her story:

"In other words, its [The Wall Street Journal] very nice reporters have no idea what was going on with investors and neither does anyone else. (Me neither!)"

In this passage, she was talking about Weibo (WB), the Chinese-version of Twitter, which despite pricing its initial public offering at the low end of its range ($17, down from an expected range of $18-$20), managed to surge in its first day of trading, gaining 19% in its debut. Sentiment in the stock, and tech stocks in general, however, actually caused the stock to open below its offering price at $16.27. This isn't particularly normal behavior, a juxtaposition she highlighted in her article.

Naturally, when I saw this, I started a conversation with Kara, about what might be the cause of it. Here's the Twitter conversation below:

I don't believe that no one knows anything. I believe the facts are there, hitting us smack in the face, and it's not something we want to hear: the dreaded "R" word. Recession.

Though I think we're headed towards a recession, let me clarify by saying I am neither bull nor bear. In fact, if anything, I'd tend to put myself more in the bull camp than anything, simply because I want people to prosper. Rising asset prices (be it equities, debt, real estate, art, various other collectibles, and to some extent, gold) allow people to move up on the societal ladder. No one wants to see someone suffer, and after the credit crisis we went through in 2008, and to some extent, are still feeling today, no one wants to see anything like that again.

However, I think we're starting to see the signs of some weakening in the global economy, led by China, and that's putting a damper on equity prices, particularly high-momentum, high-beta (read: a beta of 1.0 or more signifies a particular issue as being riskier than the overall market) names.

Pandora, Twitter, Facebook decline

Amazon, Netflix decline

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