Facebook (FB - Free Report) suffered its worst ever one-day drop of nearly 19% in Thursday trading session. This has erased nearly $120 billion from the stock’s market capitalization, the largest one-day drop in the history of the American stock market, even worse than Intel’s (INTC) market-cap loss of $90.74 billion on Sep 22, 2000.  

The freefall in FB stock came after awful Q2 earnings results, wherein the social media giant missed the Zacks Consensus Estimate for the first time in nine quarters on earnings and in 13 quarters on revenues. User growth of 11% also slowed from that of 13% in the prior quarter. Additionally, it warned of continued deceleration in revenues in the second half of the year, with revenue growth rates expected to decline by high single-digit percentages sequentially in both the third and fourth quarters. Further, the company expects operating expense to grow faster than revenues this year, by an expected 50-60%, higher than 32% recorded in 2017.

With the slide, Facebook slipped into the red for the year and is just a few points away from entering a bear market. The malaise has spread over to the broad tech sector and the broader U.S. stock market, shaving off more than 1% from the tech-heavy Nasdaq Composite Index.

ETFs That Lost Most

The terrible trading has also been felt in the ETFs having a larger allocation to the networking giant. Communication Services Select Sector SPDR (XLC - Free Report) and Global X Social Media Index ETF (SOCL - Free Report) stole the show, tumbling 3.7% and 3.5%, respectively, on the day while First Trust Dow Jones Internet Index Fund (FDN - Free Report) and Invesco NASDAQ Internet ETF (PNQI- Free Report) shed 2.3% each.

Solid Buying Point

The beaten down prices could be an attractive entry point for investors given the encouraging outlook for the sector. This is especially true as the tech sector appears fully emerged from the burst of the dot-com bubble. The emergence of cutting-edge technology such as cloud computing, big data, Internet of Things, wearables, VR headsets, drones, virtual reality, and artificial intelligence as well as strong corporate earnings are acting as the key catalysts.

Additionally, the twin tailwinds of Trump’s tax reform plan and a rising interest rate scenario are pushing the stocks higher. Most of the tech titans hoard huge cash overseas and are poised to benefit the most from reduced tax rates. They are also sitting on a huge cash pile and in a position to increase payouts to their shareholders. The cash reserves will ensure that these companies are not plagued by financial woes in a rising interest rate environment.

Adding to the strength is a pickup in the economy and better job prospects that are giving a solid boost to economically sensitive growth sectors like technology, which typically perform well in a maturing economic cycle.

Moreover, ETFs have huge diversification benefits as these have spread out exposure to a number of firms in various types of industries and can easily counter shocks from some of the industry’s biggest components.

ETF Winners

Tech ETFs with no or meager exposure to Facebook easily survived the rout. Invesco S&P SmallCap Information Technology ETF (PSCT - Free Report), offering exposure to a small-cap segment of the technology sector, gained 0.7% while AdvisorShares New Tech and Media ETF (FNG - Free Report) that offers exposure to the high-performing technology and media leaders, popularly characterized as FANG was up 0.05%. Invesco DWA Technology Momentum ETF (PTF - Free Report) , which targets companies that show relative strength (momentum), lost 0.03%. The trio does not have Facebook in its roster.

Both First Trust Technology AlphaDEX Fund (FXL - Free Report) and Invesco S&P 500 Equal Weight Technology ETF (RYT - Free Report) with 1.6% exposure in Facebook added 0.2% each.