Facebook Inc (FB), Twitter Inc (TWTR), salesforce.com, inc (CRM) Stocks Fall After Janet Yellen Speech

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Federal Reserve Chairwoman, Janet Yellen, talk in front of the Senate Banking Committee on Tuesday has caused a stir amid her claims that most of the mainstream technology and social media stocks are over stretched. The effect of her speech was quick, Facebook Inc (NASDAQ:FB) and salesforce.com, inc (NYSE:CRM) stocks fell 1.5% and Twitter Inc (NYSE:TWTR) came down by 0.6%. Many social media companies have recently published their quarterly reports and Yellen’s reaction was based on these reports.

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Yellen said that Equity valuations of smaller firms as well as social media and biotechnology firms are stretched. Discussing this issue in a program on Bloomberg, Eileen Burbidge, partner at Passion Capital, said that Yellen’s stance was ill-rated and she made some sweeping statements in her speech. She thinks that not all companies and social media stocks are over rated and Yellen’ comments can cause a detrimental trend in the market for these companies.

This is the second time this year that any Federal Reserve official has triggered sell-offs by talking of stressed valuations and stretching. Experts are now saying that this can be a secret effort to cool off markets. The investors of biotech or social media stocks are highly frustrated on this statement by Yellen.

“I do think it  was a bit of a stretch, for them to say that these valuations are over stretched. […] I think it was a sweeping generalization and I think it’s largely…sort of, ill guided,” said Burbidge.

Burbidge said that stocks like Facebook Inc (NASDAQ:FB) are really doing great in the market and saying that Social media stocks are over stretched is not right at all. She said that Facebook stocks are 22% up this year and up a 136% since one and a half year.

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