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These 5 Big Techs have shed an eye-popping $3.65 trillion in market value in a torrid year for stocks

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zuckerbergMark Zuckerberg’s Meta Platforms has seen its market capitalization tank by over $600 billion in 2022.

Stephen Lam/Reuters

  • The “Big Five” tech stocks have shed just under $3.7 trillion in market value this year so far.
  • Rising interest rates and the threat of a recession have fueled a brutal selloff in US stocks in 2022.
  • Apple, Microsoft, Alphabet, Amazon, and Meta Platforms have each erased over $500 billion in market value.

Just five Big Tech stocks have together lost $3.7 trillion in market value this year, as the Federal Reserve’s rapid interest-rate hikes hammered the share price of some of the US’s best-known companies.

Google parent Alphabet, Amazon, Meta Platforms, Microsoft, and Apple — collectively seen as the “Big Five” tech stocks — have each erased $500 billion from their market cap in 2022 so far, according to data from Refinitiv.

Those wipeouts have come in a year where the benchmark S&P 500 stock market index has plummeted nearly 19% and the tech-heavy Nasdaq has plunged just under 32%, as of Wednesday’s close.

The Fed’s aggressive interest-rate hikes have helped fuel the slide in stocks overall, but have particularly hit techs and other growth companies.

The US central bank has raised its policy rate from near-zero in March to around 4.5% by December, to try to bring down inflation that has been running at four-decade highs.

Higher interest rates encourage people to save rather than spend, and lift the cost of borrowing — both of which drag on companies’ share price.

And they tend to particularly weigh on stocks for fast-growing companies like the Big Five, as an increased cost of borrowing reduces their future cash flows, which is the primary basis for their valuations. 

Facebook parent Meta and Amazon each suffered major hits to their market caps after they warned a recession in 2023 would lead to a fall in their earnings. 

Meta shares crashed 24% in a single day in October after it missed on earnings and flagged a slowdown in digital ad spending, a risk mentioned by several in the online sector.

The social media giant — whose shift to the metaverse hasn’t been well received by many analysts — has shed $635 billion in market value this year, according to Refinitiv. Its market cap stands at $318 billion, after starting 2022 at $953 billion.

Meanwhile, Amazon plunged 11% the same month after it put out a gloomy sales forecast for the key holiday season. The online retail giant has wiped out $806 billion in 2022 so far, losing its trillion-dollar market cap for the first time since April 2020. Its at $885 billion now, from $1.691 trillion.

Alphabet’s market value fell by $758 billion, going from $1.921 trillion to $1.163 trillion. Meanwhile, Microsoft went from $2.525 trillion to $1.822 trillion, for a drop of $703 billion.

Apple’s total valuation tumbled $747 billion from its $2.902 trillion level at the start of 2022. But it remains the world’s largest company with a market capitalization of just under £2.155 trillion. 

Adding Tesla to the five Big Techs would take the group’s total market value losses to $4.2 trillion.

The electric-vehicle manufacturer’s share price has plummeted 61% this year as investors fret about the impact of Elon Musk’s Twitter takeover and an economic slowdown in China weighs on sales numbers. That’s wiped $572 billion off of Tesla’s market capitalization.

This story was amended to correct the figure for the drop in market cap for Amazon.

Read more: Tesla has surpassed Apple as retail investors’ favorite stock in 2022, research firm says

Read the original article on Business Insider