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For years, large-cap technology stocks seemed invincible. Then came 2022.
Year to date through June 13, Microsoft Corp. and the FAANG stocks — the historically prized basket of Facebook-operator Meta Platforms Inc., Apple Inc., Amazon.com Inc., Netflix Inc. and Google-parent Alphabet Inc. — have shed $3.328 trillion combined.
The losses in 2022 come after the stocks enjoyed strong growth through 2021.
Enterprise cloud demand exploded during the pandemic, and both cloud providers Microsoft and Apple added over 50% in 2021 as they solidified their competitive positions against Amazon Web Services Inc. Apple, a perennial star for tech investors, added over 37% to its share value last year. Meta managed to shake off regulatory and cultural concerns to put on over 23%, and investors held onto Netflix’s astronomical valuation, even as its pandemic gains began to burn off and membership growth slowed.
However, the new year brought war in Europe, inflation metrics that were impossible to ignore and the promise of higher interest rates.
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On an absolute basis, Apple has been the biggest loser of the basket. The company’s massive valuation and historically bullish investment thesis could not be maintained against broad market headwinds and myriad supply disruptions. The company has lost about $778.78 billion in market capital year to date, or 25.7% of its value.
In 2018, the iPhone-maker was the first U.S. company to crest $1 trillion in public market capital, and it again made records and headlines when it became the first to hit a $3 trillion valuation on Jan. 3, the first trading day of the year. It was not able to sustain that superlative through the day’s market close, and it was been sliding from that height since.
Microsoft was the second largest company to Apple in the group by market capital, and it has seen the second-largest absolute loss in value, dropping $713.21 billion through June 13, or about 28%. Amazon and Alphabet were gaining on the $2 trillion mark as the new year dawned, but those hopes have since been checked with losses of $636.22 billion and $517.63 billion, respectively.
On a relative base, Netflix took the biggest hit, shedding 71.8% of its value in less than half a year as the company missed guidance for two quarters in a row and reported its first membership decline in a decade. For the smallest company in the group, that represented a loss of just $191.46 billion in market capital.
Meta investors also bailed out of that ticker en masse. Facebook and its leadership had been struggling to maintain their reputation for some time as regulators amplified talks of privacy and antitrust reform. Not only did those risks become more salient in 2022, but the company also reported a loss of a million daily active users in the fourth quarter. Shares cratered by 51.2% between Jan. 1 and June 13.
The numbers are massive, representing about a third of the approximately $9 trillion loss of market capital represented by the year’s 21% drop in the S&P 500.
By other comparisons, the $3.33 trillion loss on the part of the FAANG and Microsoft stocks is greater than the gross domestic products of some of the world’s biggest economies. The United Kingdom is the fifth-largest country by GDP at $3.188 trillion for 2021. The loss also surpasses the GDP of India, which came in at $3.174 trillion in 2021.