If a picture is worth a thousand words, in the field of financial information that merit belongs to a very specific type: graphics. There is no better way to understand, for example, the stock market crash that Big Tech suffered in 2022 than to observe the inclined curve —with more or less oscillations depending on the case, but a clearly decreasing pattern— that the prices of large companies track industry, such as Google, Amazon or Meta. During the first quarter of 2023, however, that same curve leaves a very different pattern.
If 2022 was a bad year for the valuation of large technology multinationals, in 2023 they seem to be back with strength.
What does the data say? That at least some of the big technology companies have managed to trace a growth curve so far in 2023, with oscillations, ups and downs and different itineraries depending on the case, but in general showing a recovery trend after the 2022 “scoop”.
This is reflected by Axios, which shows how so far this year, between December 31st and March 29th, Meta has experienced a 71% increase, Tesla 57%, Apple 24%, Microsoft 17% and Alphabet 15 %. The Standard and Poor’s 500 (S&P 500), a stock index that tracks the shares of the 500 largest companies listed on the US stock exchange, grew 5% in the same period.
What about percentages? Trading numbers from the Investing platform help complete the picture. An example: On December 30, 2022, it identified a value of $120.34 per share, well down from Thursday’s $216.10. Another interesting case is that of Tesla. Musk’s multinational said goodbye to last year at US$ 123.18 and scored US$ 185.06 in the middle of this week. In the case of Apple, it went from 129.93 to 164.66.
Where we came from? From a bad 2022, a year in which large technology companies were penalized by a complex context, marked by rising interest rates. In the economic newspaper Five days It calculated that Amazon dropped 48.5%, Netflix 51.7%, and Meta saw a sharp drop of 65.4%. In the case of Apple, the fall was 25.2% and in the case of Alphabet, Google’s controller, 38.3%. The devaluation, in line with that of the Nasdaq Composite, led some analysts to even speak of a change of cycle.
The reasons? A “cocktail” of factors that includes changes in consumer habits that have affected Netflix and Meta or the impact of the size that giants like Amazon, Alphabet or Apple have reached. Morningstar completes the picture with other equally relevant factors, such as fears of recession, macroeconomic pressures, the behavior of advertising investment or, in the case of Nvidia, which suffered a significant setback, a return to the office faster than expected or US restrictions on chip sales to China.
And the reason for the change? At Axios, they slide some keys to understand the scenario in which technology companies moved during the first quarter of 2022. And one of the main ones is the behavior of their Human Resources offices. In recent months, Meta, Google, Microsoft, Amazon or, more recently, Apple, among other big tech companies, have applied significant workforce cuts. On Wall Street, they may be rewarding these adjustments.
It is not the only explanation on the table to explain the trend of recent months. Others point to the wave of enthusiasm generated by AI, a correction in the course of the market or even that some companies are allocating part of their cash reserves to buy back shares.
cover image: Nicholas Cappello (Unsplash)
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