Unexpectedly Intriguing!
July 31, 2018

On Thursday, 26 July 2018, the shareholders of Facebook (NASDAQ: FB) experienced the worst ever rout of an individual stock in stock market history, as they collectively lost over $119 billion in just one day.

Facebook on Thursday posted the largest one-day loss in market value by any company in U.S. stock market history after releasing a disastrous quarterly report.

The social media giant's market capitalization plummeted by $119 billion to $510 billion as its stock price plummeted by 19 percent. At Wednesday's close, Facebook's market cap had totaled nearly $630 billion, according to FactSet.

No company in the history of the U.S. stock market has ever lost $100 billion in market value in just one day, but two came close.

The two that came close were Intel (NYSE: INTC) and Microsoft (NASDAQ: MSFT), both of which got monkey-hammered in separate one-day crash events back in 2000. CNBC put together the chart below showing the Top 12 market cap crashes for individuals stocks. It's a well-designed, highly informative chart, but if you look closely, you'll see that all of the recorded Top 12 market cap crash events have taken place during a period spanning just the last 18 years.

CNBC: Market cap losses in big cap stocks

You don't have to be either stockholder or a consumer of Campbell's Soup (NYSE: CPB) to know both that the U.S. stock market has been around a lot longer than that and also that there's been a bit of inflation over that period of time. What would happen if we adjusted the largest one-day market cap losses for these individual stocks to account for that factor?

And then we realized that would be a pretty worthless exercise. If we were to do so, we would have to choose which inflation measure to do the adjustment (Consumer Price Index? Personal Consumption Expenditures? GDP Deflator? Tomato Soup Standard?) and also for what period of time to set the value of a dollar (should we use constant July 2018 U.S. dollars? January 2000? How about an average over the year 2000? Why not split the difference and choose some other point of time somewhere in the middle?).

Now, what some other company's stock experiences another record-setting one-day crash event several years from now, and we have to make all those choices and do all that math all over again?

The nice thing about the kind of nominal data shown in CNBC's chart is that it doesn't pose these kinds of problems. Those are the values that have direct meaning at the time at which the events occurred. What we really want is a better way to describe the magnitude of these high dollar one-day market cap crash events that directly captures how much of a bite they took out of the stock market on the days they occurred.

It occurred to us that the best way to capture that kind of information with nominal data is to directly calculate the impact of the individual stock's market cap crash on the whole stock market, which for our purposes, would mean dividing the individual stock's market cap loss by the value of the market capitalization for a major stock market index that includes the individual stock as a component to find its relative magnitude as a simple percentage of the total valuation of the index.

Since CNBC's Top 12 list is made up of large cap stocks, it would make sense to use the market cap of the S&P 500, since each listed company is a component of this market-cap weighted index and the index represents about 80% of the capitalization of the entire U.S. stock market. If you understand the 80-20 rule, you know why that matters....

What this does is give us an objective measure that doesn't require needlessly repetitive and not terribly worthwhile calculations to tell how big of a market rout such a one-day crash event may have been. In fact, we can immediately compare the relative magnitude of a given event with others to tell which would have a larger impact in the terms of the stock market of its day.

We've done that math for CNBC's Top 12 market cap crash events for individual stocks in the following dynamic table, which you can sort from either high-to-low or from low-to-high by clicking the various column headings. What's more, if you insist on putting a particular day's dollar value on the magnitude of a market cap crash event, you can by simply multiplying the percentage we've calculated by the applicable market cap for the S&P 500 index (we've estimated those values with respect to the S&P 500's recorded market cap at the beginning of July 2018).

If you're accessing this article on a site that republishes our RSS news feed, please click through to access a working version of the dynamic table. If not, we've added an extra column with the "Adjusted Rank" to make it easy to tell how each company stock's market-cap crash ranked in terms of how big a bite it took out of the S&P 500 total market cap.

Largest One-Day Market Cap Losses for Individual Stocks Since January 2000
Nominal Rank Company (Ticker) Date of Loss Largest One Day Market Cap Loss As Percent of S&P 500 Market Cap Adjusted Loss (for July 2018 S&P 500 Market Cap) Adjusted Rank
1 Facebook (NASDAQ: FB) 26 Jul 2018 $119,419,310,000 0.48% $119,419,310,000 4
2 Intel (NYSE: INTC) 22 Sep 2000 $90,736,960,000 0.76% $189,950,184,825 1
3 Microsoft (NASDAQ: MSFT) 3 Apr 2000 $80,024,600,000 0.64% $159,693,090,470 2
4 Apple (NASDAQ: AAPL) 24 Jan 2013 $59,633,680,000 0.47% $117,297,800,738 5
5 Exxon Mobil (NYSE: XOM) 15 Oct 2008 $52,511,380,000 0.58% $146,531,232,794 3
6 General Electric (NYSE: GE) 11 Apr 2008 $46,914,750,000 0.38% $96,029,919,403 7
7 Alphabet (Google) (NASDAQ: GOOGL) 2 Feb 2018 $41,074,840,000 0.17% $42,719,042,603 10
8 Bank of America (NYSE: BAC) 7 Oct 2008 $38,486,790,000 0.40% $101,412,985,020 6
9 Amazon (NASDAQ: AMZN) 2 Apr 2018 $36,477,450,000 0.16% $40,641,561,536 11
10 Wells Fargo (NYSE: WFC) 5 Feb 2018 $28,905,810,000 0.12% $30,062,893,218 12
11 Citigroup (NYSE: C) 23 Jul 2002 $25,941,230,000 0.29% $71,520,350,626 8
12 JPMorgan Chase (NYSE: JPM) 29 Sep 2008 $24,884,180,000 0.23% $57,118,598,093 9

After adjusting for the relative impact on the S&P 500 in terms of the index' total market capitalization, we find that Facebook's nominal single-day record decline actually ranks fourth at 0.48% when considering the impact of the stock price drop upon the U.S. stock market as represented by the S&P 500 index. We find that Intel's 22 September 2000 crash claims the top spot with an adjusted market loss of 0.78% (or nearly $190 billion in terms of July 2018's S&P 500 market cap), followed by Microsoft's 3 April 2000 decline of 0.64% (nearly $160 billion) in second place, and Exxon Mobil's 15 October 2008 drop of 0.58% (over $146 billion) coming in third, all of which representing a bigger relative bite out of the stock market of their day than what Facebook's nominal record-setting $119 billion loss of the company's market valuation did on 26 July 2018.

And that's covering the biggest one-day market cap crashes for individual stocks since January 2000! If we went further back in time, who knows what the real all-time one-day market cap crash champion would turn out to be! If you have the individual stocks market cap loss and the total market cap for the S&P 500 index on the day(s) before the individual stock's crash event, the math is easy, the results are clear, and any time that you have a new event, you would simply insert the results of the math into the appropriate row of the ranking table.

References

Imbert, Fred and Francolla, Gina. Facebook's $100 billion-plus rout is the biggest loss in stock market history. CNBC. [Online Article]. 26 July 2018.

Standard & Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. 29 June 2018. Accessed 29 July 2018.

McMillan, Alex Frew. Year of the big stock drop. CNNMoney. [Online Article]. 12 October 2000.

Labels: ,

About Political Calculations

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

Thanks in advance!

Recent Posts

Stock Charts and News

Most Popular Posts
Quick Index

Site Data

This site is primarily powered by:

This page is powered by Blogger. Isn't yours?

CSS Validation

Valid CSS!

RSS Site Feed

AddThis Feed Button

JavaScript

The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.

Other Cool Resources

Blog Roll

Market Links

Useful Election Data
Charities We Support
Recommended Reading
Recently Shopped

Seeking Alpha Certified

Archives
Legal Disclaimer

Materials on this website are published by Political Calculations to provide visitors with free information and insights regarding the incentives created by the laws and policies described. However, this website is not designed for the purpose of providing legal, medical or financial advice to individuals. Visitors should not rely upon information on this website as a substitute for personal legal, medical or financial advice. While we make every effort to provide accurate website information, laws can change and inaccuracies happen despite our best efforts. If you have an individual problem, you should seek advice from a licensed professional in your state, i.e., by a competent authority with specialized knowledge who can apply it to the particular circumstances of your case.