"Living in Fear" Seohak Ants... Shock Report Card, Focused 'Picking Up' on US Big Tech like Meta

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] Seohak Gaemi (domestic investors investing in overseas stocks) are concentrating their purchases on US big tech companies such as Meta, Google, and Amazon. It is interpreted that they took advantage of the sharp stock price drop following the shocking Q3 earnings report as a buying opportunity.

According to the Korea Securities Depository Securities Information Portal on the 6th, the top stock that domestic investors net bought in the past week (October 28 to November 3) was Meta Platforms, the operator of Facebook (hereinafter Meta). During this period, domestic investors net purchased about $26.36 million (37.3 billion KRW) worth of 'Meta Platforms Class A' shares.

The settlement details on the Securities Information Portal reflect US stock trading three days prior to the given date, so trades made during the US big tech companies' earnings week starting from October 25 are reflected from the settlement details dated October 28.

Meta, which operates global social networking services (SNS) such as Facebook, WhatsApp, and Instagram, saw its stock price plunge as its Q3 earnings plummeted this year. Revenue from July to September was $27.71 billion (39.3482 trillion KRW), and net income was $4.4 billion (6.248 trillion KRW), shrinking to less than half of last year's net income ($9.2 billion) for the same period.

According to investment information provider Investing.com, from October 25 to November 1, the closing price of 'Meta Platforms CLASS A' stock fell 30.77%, from $137.51 to $95.20.

Domestic investors also heavily bought Alphabet, Google's parent company, whose stock price sharply dropped due to poor Q3 earnings. The net purchase amount for voting 'Alphabet Class A' shares was about $15.07 million (21.3 billion KRW), and for non-voting 'Alphabet Class C' shares, $4.09 million (5.8 billion KRW). The combined net purchase amount of these two stocks exceeded that of Tesla ($16.04 million / 2.26 billion KRW).

Alphabet, which operates Google and YouTube, posted Q3 revenue of $69.09 billion (99.059 trillion KRW), a 6% increase compared to the same period last year. This is the lowest growth rate since 2013, excluding the COVID-19 period. In particular, the market expected YouTube ad revenue to increase by about 3%, but it actually decreased by about 2%, shocking investors. Consequently, Alphabet's stock price plunged 13.41%, from $104.48 on October 25 to $90.47 on November 1.

The Exchange-Traded Fund (ETF) 'ProShares UltraPro QQQ,' which has consistently been favored by Seohak Gaemi, also ranked within the top 10 with a net purchase amount of $8.55 million (12.1 billion KRW). This ETF is a high-risk, high-return leveraged product that tracks the Nasdaq-100 Index, which separately gathers 100 leading companies listed on the Nasdaq Stock Exchange, with triple the return. Known by the ticker 'TQQQ,' this ETF, vulnerable to interest rate hike pressures due to the nature of tech stocks, recently suffered a nearly 10% drop again during the week starting October 25.

Experts advise that rather than viewing the sharp stock price drops of big tech companies as an unconditional buying opportunity, investors should carefully consider the companies' fundamentals before investing. Since the recent declines may not be temporary phenomena caused by macroeconomic conditions such as interest rate hikes and economic recession, a conservative approach is necessary by assessing the growth potential and profitability of the companies' core business units.

Kim Jong-han, a researcher at Samsung Securities, said, "The decline in Meta's stock price is influenced by macroeconomic factors but is also a complex issue involving high advertising dependency, intensified competition among platforms, and Apple's privacy policy changes. For a turnaround in earnings, CEO Mark Zuckerberg needs to take events such as reducing metaverse investments. Investing simply because the stock price has fallen significantly from its peak without considering the company's fundamentals is akin to betting on luck."

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