The financial markets in general, and technology stocks in particular, were hit hard on Tuesday as the Nasdaq endured its biggest one-day point drop in history by falling more than 229 points, a loss of 5.6 percent. Much of the decline was profit-taking after the Nasdaq had such a strong run in 1999, but Tuesday clearly was not a day for an Internet company to announce anything that could be viewed as bad news.
That is exactly what the recently-public FreeMarkets (Nasdaq: FMKT) did on Tuesday, and its stock got hammered. Shares of FreeMarkets, which conducts business-to-business auctions, tumbled more than 18.5 percent, closing down 63-3/8 to 278-1/2 after the company announced that General Motors is canceling its agreement with FreeMarkets.
This announcement, however, was not surprising at all. Even before FreeMarkets went public last month, GM and Commerce One had announced that they were working together on an online marketplace. It seemed clear that this meant the end of GM’s relationship with FreeMarkets. All things considered, Tuesday’s sell off may have been a bit overdone.
“We do not anticipate that the cancellation of the General Motors agreement will have a material impact on our revenue or results of operations in 2000,” FreeMarkets CEO Glen Meakem said.