Why Facebook, Sprint, and TripAdvisor Slumped Today

Markets Motley Fool

Stocks started the week in the red, with the Dow Jones Industrial Average pulling back further from the record highs it set early last week. The broader market fell even more, and the technology sector found itself particularly hard hit by concerns about the sustainability of the bull market. Comments regarding the potential course of U.S. interest rates also weighed on sentiment among investors, especially because worries have already surfaced about whether the tightening that the Fed contemplates could prove too much for the economic recovery to bear. A few stocks were especially weak, and Facebook (NASDAQ: FB), Sprint (NYSE: S), and TripAdvisor (NASDAQ: TRIP) were among the worst performers on the day. Below, we'll look more closely to tell you why they did so poorly.

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Facebook keeps trying to deal with Russia fallout

Shares of Facebook fell 4.5% as the social media giant found itself the subject of controversy surrounding the role that Russia has played in influencing political elections. CEO Mark Zuckerberg has attempted to walk the line between accepting some measure of responsibility for allowing Russian interests to purchase Facebook ads in an attempt to affect the outcome of the U.S. presidential election and forestalling a more aggressive response from lawmakers or regulators. These issues have been outstanding since just after the election, yet a failure to move forward has some wondering if Facebook will be able to avoid a bigger hit to its business.

Sprint makes its case

Sprint stock dropped over 8% after news surfaced that the wireless carrier reportedly might be willing to do a merger deal without getting a substantial premium to its current price. Major shareholder SoftBank will be critical to any strategic combination taking place, and some had expected that T-Mobile would have to offer a significantly higher amount than the current share price to get a deal done. After the report, though, investors now seem to expect final terms that bear little difference from the two stocks' relative pricing right now. If the talks go well, an agreement could come as early as next month.

TripAdvisor gets a poor review

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Finally, shares of TripAdvisor fell 7%. Analysts at Guggenheim Partners kept their rating on the online travel stock at neutral, but they reduced their estimates for revenue growth and for cost-per-click revenue from previous levels. Competition is getting fiercer, and TripAdvisor has had to work hard in its efforts to transform its business from its previous focus on travel recommendations toward promoting direct bookings and travel purchases. If industry rivals are able to retrench and fight more aggressively, then TripAdvisor could well have trouble even sustaining its current level of success -- let alone building it up in the future.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook and TripAdvisor. The Motley Fool has a disclosure policy.