Market Cap of 7 Major US Big Tech Firms Drops by 4700 Trillion Won in One Year... Meta Stock Plummets 70%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] $3.286 trillion (approximately 4,669.406 trillion KRW). This is the scale of market capitalization that has evaporated from the seven major big tech companies including Google Alphabet, Meta Platforms, and Amazon over the past year.

As the U.S. central bank, the Federal Reserve (Fed), continues its aggressive interest rate hikes causing stock prices to decline, the big tech companies are facing even deeper concerns due to a ‘performance shock.’ Meta, whose third-quarter net profit was halved, saw its stock price plunge by a staggering 24.56% in just one day.

◆ Market Cap of 7 Major Tech Stocks Plummets... Double-Digit Stock Price Drops

On the 27th (local time), economic media CNBC reported that the seven major tech stocks leading the New York Stock Exchange?Alphabet, Microsoft (MS), Meta, Amazon, Tesla, Netflix, and Apple?have suffered losses exceeding $3 trillion in market capitalization over the past year.

Based on the closing prices of the day, the combined market capitalization of the seven major tech stocks totaled $7.45 trillion, sharply down from $10.7358 trillion on October 27 of last year. In just one year, about $3.286 trillion disappeared. By company, Alphabet, Google's parent company, experienced the largest drop with a $746 billion decrease in market cap over the year. This was followed by MS ($735 billion), Meta ($605 billion), Amazon ($590 billion), Tesla ($332 billion), Netflix ($162 billion), and Apple ($115 billion).

Meta’s plunge, which was shunned by the market due to poor performance, stands out. Its stock price dropped by 70.88% over the past year. After releasing disappointing earnings following the previous day’s market close, Meta’s stock plummeted 24.56% in a single day. The closing price of $97.94 broke below the $100 mark for the first time since February 2016. Earlier in February, Meta also plunged 26.4% in one day due to a fourth-quarter earnings shock. Bloomberg reported, "Meta, which was ranked 6th with a market cap of over $1 trillion at the beginning of the year, has now fallen to 27th."

Alphabet and MS, which also announced earnings below market expectations before Meta, saw their stock prices fall more than 30% over the past year. Netflix’s stock price drop exceeded 50% as the pandemic effect faded. Amazon and Tesla, struggling with slowing sales in the e-commerce sector, fell 33.44% and 36.1%, respectively. These declines all surpass the Nasdaq index’s (-29.16%) drop over the past year, which is tech-stock heavy. Apple, the largest by market cap, fell 18.45% year-over-year, managing to hold up relatively well.

◆ Advertising Revenue Hit, Recession Concerns... Future Earnings Clouded

The problem is that the outlook for these big tech companies remains bleak. Immediate damage to advertising revenue, the main source of income for Alphabet and Meta, has been confirmed, while global recession signals are growing stronger day by day. For tech stocks sensitive to interest rates, the Fed’s ongoing aggressive tightening to curb inflation is inevitably a burden.

The strong dollar is also a negative factor for these big tech companies, whose overseas sales account for more than half of their total revenue. The process of converting overseas sales into dollars erodes revenue.

Additionally, large-scale capital investments in new growth engines such as the metaverse have yet to reach profitability, adding to the burden on each company. Major investment banks like Morgan Stanley and Cowen have all lowered Meta’s target price to around $105, about half of the previous level, citing future earnings outlook and cost burdens.

Amazon’s earnings released after market close on the same day did not dispel these market concerns surrounding big tech. Following disappointing third-quarter sales, the outlook for fourth-quarter earnings, which includes the year-end shopping season, was also confirmed to be bleak. Meanwhile, operating expenses soared double digits despite various cost-cutting measures. CNBC reported, "Amazon, like other big tech companies, faced a tough year battling macroeconomic headwinds, soaring inflation, and interest rate hikes," adding, "It is wrapping up a disappointing week of big tech earnings announcements."

Meanwhile, Apple, which also released earnings on the same day, exceeded market expectations in both sales and net profit but left some disappointment as iPhone sales, which account for half of total sales, showed a lackluster performance. Apple did not provide a separate earnings guidance that day but forecasted a decline in fourth-quarter sales (Apple’s fiscal 2023 first quarter).

On the same day in the New York Stock Exchange, these seven big tech companies all closed in the red except Tesla (+0.20%).

This content was produced with the assistance of AI translation services.