Today: Facebook, Twitter and Silicon Valley's other social-media stocks take another hit ahead of a trio of important earnings reports this week. Also: Apple and other traditional valley powerhouses gain while newer tech companies suffer on Wall Street.
The Lead: Social-media stocks pounded again ahead of earnings reports
Silicon Valley companies have faced a brutal stock market turn in the spring, especially for so-called momentum stocks that enjoyed strong gains in 2013. Social-media stocks have been especially hard-hit, a pattern that continued Monday ahead of three important earnings reports scheduled for this week.
The largest social network in the world, Facebook, released earnings last week that were well-received by the financial community, but the Menlo Park company's stock has not been spared. Facebook shares declined 2.7 percent to $56.14, and have now fallen 22.7 percent from the peak price paid for Facebook stock, a decline known as a bear market.
Other social networks have performed much worse, however, more easily topping the 20 percent level while still having to prove themselves with quarterly financial updates. The only other public valley social company to release earnings so far this quarter is Zynga, which announced the departure from day-to-day operations by founder Mark Pincus last week and dropped 4.4 percent Monday to $3.90, 33.8 percent lower than its 52-week high.
First up this week is Twitter, which is scheduled to release its quarterly report Thursday. After the San Francisco microblogging company's 2.1 percent descent to $40.73 Monday, it has now declined 45.5 percent overall from the peak price paid on Dec. 26, the end of a post-IPO run-up that pushed Twitter to nearly $75 a share.
Twitter has shown off tremendous revenue growth -- sales more than doubled in 2013, the fifth-best performance from a public Silicon Valley technology company -- but it has had trouble increasing its user base: The Wall Street Journal pointed out Monday that Twitter aimed to have 400 million engaged users at the end of 2013, but ended up with 241 million. Twitter's varied results in different metrics have made it a polarizing topic among financial analysts; Reuters noted that 11 analysts it tracks rate the stock a "Sell," while seven call it a "Buy," a much bigger split than other social stocks.
"Twitter is one of the best plays off two of our 2014 Internet growth factors: increasing mobile materiality and the online migration of TV ad budgets," RBC Capital Markets analyst Mark Mahaney wrote in a recent note, before detailing the opposite side.
Twitter "needs to prove two things: that it can successfully increase its reach with advertisers; and that it can successfully increase its user base and engagement levels," Mahaney added.
Twitter will be followed by two other social companies that have dived more than 40 percent from their 52-week highs. Yelp arrives Wednesday, after the biggest decline in the group: The San Francisco online-reviews company is down 45.4 percent from its peak price of more than $100, after Monday's 3.6 percent decline to $55.55.
On Thursday, LinkedIn will take center stage, with expectations that revenue growth will continue to be a strength. Even with those expectations, though, the Mountain View professional-networking service has plunged 42.5 percent from an all-time high reached last year, after a 6.4 percent decline to $148.06 Monday.
Analysts and investors will be watching these reports sharply for signs that recent declines have more to with the investors than the companies, or the opposite.
"Given the sharp sell-off of many high growth technology stocks over the past 6 weeks, the upcoming Q1 earnings reports should determine whether a further decline is warranted due to deteriorating fundamentals ... or is more of a valuation correction and profit-taking activity," Wunderlich Securities analyst Blake Harper predicted in a note Monday.
SV150 market report: Apple jumps while most tech stocks sag
Wall Street clocked overall gains in the Dow Jones industrial average and Standard & Poor's 500 indexes Monday, masking continuing turmoil for technology stocks. The tech-heavy Nasdaq composite index notched a tad lower, while the SV150 index of Silicon Valley's largest tech companies jumped 0.6 percent largely due to the outsize influence of Apple.
Apple jumped 3.9 percent to $594.09 Monday, the closest the Cupertino tech company has come to $600 a share in more than a year. While other tech stocks have suffered, Apple has soared since announcing last week that it would increase its share-repurchase plan by $30 billion and split its stock, giving Apple investors seven shares for every one they currently own. Monday's boost came as Apple's most recent court fight with Korean rival Samsung draws to a close, with closing arguments now expected Tuesday, as the tech giant reportedly launches new MacBook Air laptops while offering to fix faulty power buttons on some iPhones.
Other traditional tech powerhouses with large influence on the SV150 also commanded price increases Monday, as Hewlett-Packard rose 1.9 percent to $32.19 and Oracle gained 1.7 percent to $40.13. However, two-thirds of the SV150 companies declined Monday on Wall Street, and entire sectors of smaller-cap companies were hit hard by investors, namely streaming media and cloud software. Silicon Valley's biggest names in streaming media, Netflix and Pandora Media, fell 2.4 percent and 2.9 percent respectively, as big tech companies continued to show off their Netflix rivals and Pandora's earnings continued to be parsed. In cloud software, Salesforce had the second largest percentage decline Monday in the SV150, diving 7 percent to $49.13, while NetSuite fell 4.5 percent to $73.59 before getting an after-hours boost from its earnings report.
Up: Apple, HP, Oracle, NetApp, Applied Materials, Intel, Gilead, Cisco, SanDisk
Down: Salesforce, LinkedIn, SolarCity, Yelp, Zynga, VMware, Pandora, Facebook, SunPower, Netflix, AMD, Twitter, Adobe, Juniper, Yahoo
The SV150 index of Silicon Valley's largest tech companies: Up 7.73, or 0.56 percent, to 1,380.9
The tech-heavy Nasdaq composite index: Down 1.16, or 0.03 percent, to 4,074.4
The blue chip Dow Jones industrial average: Up 87.28, or 0.53 percent, to 16,448.74
And the widely watched Standard & Poor's 500 index: Up 6.03, or 0.32 percent, to 1,869.43
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.