1. Record-breaking earnings report, yet stock price drops 7%: What is the U.S. stock market really afraid of?

Main Text Quarterly revenue: $64 billion — a new all-time high. That’s nearly $1 billion above Wall Street’s expectations. Yet the stock price fell 7%. This was Meta’s experience on October 22. Was there a hidden bomb in the earnings report? No. Rather, the entire U.S. stock market suddenly grew fearful of one thing. 01 What happened—in just one day Thursday, October 22, Eastern Time. The Nasdaq Composite Index closed down roughly 2.1%; the S&P 500 fell about 1.3%. The Dow Jones Industrial Average proved relatively resilient—briefly nearing flat during the session. The hardest hit were tech stocks—especially semiconductor companies: ・ Lam Research (a leading chip equipment maker): pre-market decline of ~9% ・ Applied Materials and KLA: declines of ~6% ・ AMD, Intel, and SanDisk: declines of 4%–5% ・ Even NVIDIA wasn’t spared. Meanwhile, two other indicators moved in the opposite direction: Brent crude oil surged above $111 per barrel—the highest since May. The 10-year U.S. Treasury yield dropped 11 basis points, to 5.02%. Money flowed out of equities—and part of it rushed into bonds for safety. In other words, this wasn’t a case of “someone dumping shares.” Instead, multiple needles pricked the market simultaneously. 02 First needle: AI spending is simply too aggressive Let’s return to Meta. Its earnings report looks nearly flawless on revenue alone: $64 billion, up ~26% year-on-year. The problem lies elsewhere—in several other figures. First, Meta raised the lower end of its full-year capital expenditures (primarily for chips and data centers) from $130 billion to $135 billion; the upper end remains at $145 billion. Second, according to Benzinga, Meta’s free cash flow for this quarter was negative—approximately -$2.1 billion. Third, the company plans to issue a new class of non-voting Class C shares—nominally a “1-for-2 split”—and explicitly stated this move will help fund its AI infrastructure buildout. What does this mean? Simply put: Meta is earning a lot—but spending even more, to the point where it must seek additional funding. What the market truly fears isn’t whether AI works—but rather, when—or if—this massive spending will ever pay off. Tesla followed the same script: its earnings also beat expectations, yet it announced plans to spend even more on projects like the Optimus robot and Cybercab autonomous taxi through 2027–2028—triggering similar stock volatility and declines. 03 Second needle: The semiconductor sector’s chain reaction How much AI giants spend directly determines how many chips semiconductor firms can sell. So once the market begins questioning whether “AI infrastructure buildout might slow,” chip stocks are the first to suffer. On Thursday, Lam Research led the plunge after releasing its earnings—dragging the entire chip-equipment sector down with it. But this isn’t an isolated one-day event. Bank of America analysts noted that the Philadelphia Semiconductor Index has already undergone several corrections exceeding 20% this year.

Low-priced stocks | 2024 NASDAQ Listing Requirements Updates (Summary)

In 2024, Nasdaq has been continuously revising its procedures for handling low-priced stocks—with a focus on reducing the number of cheap, high-risk stocks trading on its exchange. Here’s what you need to know. I. Low-Priced Stocks: Amendments to the Bid Price Compliance Process Proposed Date August 6, 2024 Status The comment period is currently open. The U.S. Securities and Exchange Commission (SEC) issued a notice seeking public comments on the proposed rule changes on August 19, 2024, and will decide within 45 to 90 days whether to approve or reject the amendments. Summary If a listed company fails to maintain a $1.00 minimum bid price for more than 360 consecutive days, it will face immediate delisting—even if it appeals Nasdaq’s delisting decision. Any company that has executed a reverse stock split within the past year but whose share price remains below the $1.00 minimum bid price will be delisted immediately (subject to appeal). In-Depth Details Under Nasdaq’s current listing rules, if a listed company’s minimum bid price falls below $1.00 for 30 consecutive trading days, Nasdaq issues a delisting notice. From the date of notification, the company has 180 calendar days to regain compliance—by maintaining a minimum bid price of $1.00 or higher for at least 10 consecutive trading days within that 180-day window. If the company fails to meet this requirement within the first 180 days, it may qualify for a second 180-day compliance period—provided it satisfies all other initial listing standards at the end of the first compliance period. If a company still fails to meet the minimum bid price requirement during the second 180-day compliance period, Nasdaq will issue a delisting determination. However, the company may appeal to the Nasdaq Listing Qualifications Hearings Panel. Under current rules, its securities continue trading on Nasdaq during the appeal process—effectively extending the total compliance period to 540 days. Nevertheless, Nasdaq retains the authority to delist any security whose closing price falls at or below $0.10 for 10 consecutive trading days at any point during the compliance period. On August 6, 2024, Nasdaq proposed new rules stipulating that any common stock failing to meet the minimum bid price requirement will be immediately suspended from Nasdaq trading for 360 days. Companies may still appeal to the Hearings Panel, which may grant a third 180-day remediation period—but during that time, the security will remain suspended from Nasdaq trading. Once suspended, the company’s securities will trade over-the-counter during the appeal period. Additionally, Nasdaq proposed that any company failing to meet the minimum bid price requirement—and having implemented a reverse stock split within the prior year—will be subject to immediate delisting (appealable). According to Bloomberg, under the proposed rules, AI and biotech startups face the greatest delisting risk. Nearly 40% of companies with market caps below $1.00 belong to the healthcare sector. As of August 21, 2024, 430 stocks traded below $1.00—compared to just 72 such stocks on the same date in 2021. II. Minimum Bid Price Compliance and Reverse Stock Splits

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