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Sunday, November 27, 2022

Big technology stocks like Tesla, Amazon and Microsoft ended their worst quarter in years

Elon Musk attends the 2022 Met Gala celebrating “In America: An Anthology of Fashion” at The Metropolitan Museum of Art on May 2, 2022 in New York City. (Photo by Gotham/Getty Images)

Gotham | Getty Images

Investors lowered valuations of the world’s largest technology companies in the second quarter as central bankers changed interest rates to beat inflation.

Big tech names became undervalued in the first quarter, adding trade cuts and supply complications seen in the pandemic with Russia’s invasion of Ukraine, sending the broader S&P 500 index down nearly 5%. The situation worsened in the second quarter as the Federal Reserve acted with a rate hike. While the S&P fell another 16%, the technology-heavy Nasdaq Composite Index lost 22%.

US stocks fell on Thursday to end the second quarter, making the S&P 500 its weakest first half of the year since 1970.

Electric-vehicle maker Tesla suffered its biggest quarterly decline since its 2010 initial public offering as the stock sank nearly 38%. In the quarter, CEO Elon Musk made a bid to acquire social media company Twitter for $44 billion.

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Amazon stock dropped about 35%, the most since the third quarter of 2001. The company’s first-quarter earnings fell short of analysts’ estimates in April as revenue growth slowed. In early June, Amazon said Dave Clark, the CEO of the e-commerce company’s worldwide consumer business, was resigning. In September he will debut as CEO of supply chain software startup Flexport.

Shares of Google’s umbrella company, Alphabet, ended the quarter down nearly 22%, the worst result since the fourth quarter of 2008. Microsoft’s shares fell nearly 17%, the sharpest decline since the second quarter of 2010.

Apple’s stock fell nearly 22% in the second quarter in the stock’s worst performance since the fourth quarter of 2018, when Apple reported lighter guidance and the stock market overall was heavily sold.

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Facebook parent meta platforms — whose ticker symbol changed from FB to Meta this month to match its new corporate identity reflecting a strong emphasis on virtual worlds where people can transact and interact — up 27% of its stock. further decline was observed. That was a better result than the first quarter, when the stock’s value was down about 34%. In February, the social-network operator said its number of daily active users (DAUs) on Facebook decreased quarter-on-quarter for the first time.

Drugmakers Eli Lilly and Merck, cereal maker Kellogg’s and discount retailer Dollar General all outperformed these six companies, posting gains of at least 10% in the quarter.

watch: Too many names in growth tech will never recover, says EMJ Capital’s Eric Jackson

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