Why Facebook, Universal Display, and Hecla Mining Slumped Today
Monday was an ugly day on Wall Street, as the Dow fell over 300 points and some broader benchmarks suffered even greater losses on a percentage basis. Bad news from some of the most important parts of the market set a negative tone for investors in all stocks, adding to the general sense of uncertainty surrounding the geopolitical and macroeconomic situation both in the U.S. and across the globe. Facebook (NASDAQ: FB), Universal Display (NASDAQ: OLED), and Hecla Mining (NYSE: HL) were among the worst performers on the day. Here's why they did so poorly.
Facebook deals with user data fallout
Share of Facebook fell 7% as the social media giant suffered from reports concerning improperly distributed data from 50 million of its users. Initial suggestions that this episode might have constituted a data breach were rejected by Facebook, but even so, the troubling issues surrounding user privacy have spurred members of the Senate to call for congressional testimony from CEO Mark Zuckerberg concerning the broader topic of user privacy and corporate data use. Today's drop suggests fear that Facebook's entire monetization model might get compromised, which seems like an overreaction at this point.
Will Universal Display get replaced?
Universal Display stock plunged 12% after reports that one of the company's main customers is looking at bringing display production for its electronic devices in-house. Apple (NASDAQ: AAPL) has reportedly worked on building prototypes for the displays for its future mobile devices, utilizing a previously unknown facility in California to use so-called MicroLED technology for investigating display production. The move could protect Apple from potential supply problems in the display area, which would have the possibility of bottlenecking production in future releases of new devices. For Universal Display, the potential loss of a big customer could be devastating, even though small OLED screens for smartphones and tablets pale in comparison to the larger uses in televisions and other big-screen applications.
Hecla makes a big buy
Finally, shares of Hecla Mining fell 13.5%. The silver mining company said that it would acquire Klondex Mines (NYSEMKT: KLDX) in a $462 million transaction, with Klondex shareholders to receive $2.47 in cash or 0.6272 Hecla shares at their election for every Klondex share they own, subject to limits on the amount of cash and stock available. Hecla will also spin off Klondex's Canadian assets to the target company's shareholders, leaving Hecla with three U.S. mining properties. Investors are concerned that Hecla might have bitten off more than it can chew, especially with silver prices having been weak recently, but proponents of the deal see consolidation as a necessary step toward a brighter future for Hecla and the industry as a whole.
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Dan Caplinger owns shares of Apple. The Motley Fool owns shares of and recommends Apple, Facebook, and Universal Display. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.