Few weeks have been as awaited in the tech world as this one. On Tuesday (26), Alphabet (Google-YouTube) and Microsoft (Linkedin) announce their results for the first half of the year. On Wednesday (27), it will be the turn of Meta (Facebook-Instagram-WhatsApp). On Thursday (28), Amazon and Apple close the agenda that promises to be hot. A few semesters in history have made this group of companies, the BigTechs, catch so much. All have lost market value this year.
Which is paradoxical, since none of them has put less money in the box throughout history. Even so, the performance throughout 2022 can be considered frightening to its shareholders. All collapsed above double digits. The one that lost the least was Apple. Still, the company saw its shares drop 10.5% (from $172.12 on January 3 this year to $154.09 at the close of the 22nd, Friday). Next comes Microsoft, with a drop of 17.1% in the same period (from US$ 314.04 to US$ 260.36). Then comes Alphabet, owner of Google, with a reduction of 20.5% (from US$ 137.00 to US$ 108.36). Second in the value loss ranking is Amazon, which is down 24.7% (from $162.55 to $122.42). And leading the shrinking ranking, Meta Platforms, which melted 49.0% (from $331.79 to $169.27).
The paradox lies in the fact that they are all profitable companies. In addition, they remain innovative and are managed at the highest level. In addition to this, or as a consequence of this, it has loyal, numerous and globally present consumers. They are grandiose brands, among the most valuable on the planet. And none of them – with the exception of Meta – is worth less than $1 trillion. In that ranking, Apple was still valued at close on Friday (22) at nearly $2.5 trillion. Next come Microsoft ($1.9 trillion), Alphabet (1.4 trillion), Amazon ($1.2 trillion) and Meta ($458 billion). Together the five corporations are worth $7.5 trillion.
All lost value not because of problems with products or recipes. They lost by a combination of especially three factors. One of them can be said is concrete. The other two are fuzzy and based more on perspectives than facts. On the concrete side, we have the main Central Banks in the world raising interest rates. This means that countries’ debt securities pay investors more. And it’s a sure return money. The result is a record attraction of these investors, who sell their risky assets (stocks) and migrate to bonds. The second factor is uncertainty about the future of the global economy. The pandemic not yet defeated and a war in Europe with no foreseeable end have a discouraging effect on the attraction to risk on the part of big capital. This had an effect on Big Techs’ share price. The third factor is the emergence of increasingly aggressive laws and regulations on the concentration of power of these companies, especially by European authorities, who want to tax and regulate their operations more, which brings down the horizon of gains.
For that bundle of reasons, the results these companies will announce this week will be defining returns for the money. And to say, at the same time, how is the mood of high investment in relation to the future of the entire global economy.
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