[Chronique de Gérard Bérubé] techno waste

Tech stocks have had another tough week. Post-pandemic hangovers, explained an eMarketer analyst.

This expression, associated with the techno giants of the web, translates to the euphoric effect of the health crisis on their financial results. Today, higher interest rates, inflation and shortages are affecting them, forcing the Nasdaq to post a loss of about 15% for the month, its biggest crash since 2008. Compared to its mid-November peak, the index representing tech stocks is down 23%, its worst correction His tech stocks crash in the early 2000s.

(You have to put all that into perspective, even though that indicator, backed by two years of the pandemic, was building up 115% between March 2020 and the peak in November 2021.)

Technology stocks, which account for about 30% of the S&P 500, accelerated the decline in Wall Street. The S&P 500 extended its decline on Friday to amplify its April loss to nearly 9% — the worst month for the stock market since the pandemic began — and to more than 13% this year.

amazon shakist

Amazon stock was the rockiest this week, with a 14% loss mostly on Friday. Amazon was just disappointed with its weaker-than-expected sales guidance for the current quarter, citing inflation and supply chain difficulties. Its chief financial officer estimated the additional costs in the first three months of the year at about $6 billion, due in particular to lost productivity, inflation and the cost of labor, after its staff doubled during the pandemic. Amazon lost $3.8 billion due to a loss in investment, marking its first quarterly loss since 2015, according to a text from Agence France-Presse (AFP).

Apple also posted slower revenue growth in the January-March quarter, where the 9% year-over-year increase was the first time since the summer of 2020 that Apple recorded single-digit growth. If its sales volume exceeded half of the sales volume, iPhone sales increased by only 5.4%.

The group has been able to reduce supply issues affecting the entire electronics sector, particularly in the semiconductor industry. He still estimates that the disruption caused by the resurgence of coronavirus cases should deprive him of $4 to $8 billion in income for the current quarter.

Alphabet (Google, YouTube) and Meta (Facebook, Instagram) spoke of the pressure on online advertising in an ever more challenging economic environment. Not to mention the impact of TikTok’s appeal to young adults. Google’s parent company made 8% less profit than it did a year ago, while Meta posted a 21% lower net profit year on year, according to AFP.

Netflix opened the ball on April 20 by announcing that it lost 200,000 subscribers worldwide in the first quarter compared to the end of 2021 — the first in more than a decade, as a result of its weakness due to Netflix’s withdrawal from Russia — and by saying we expect it to lose more in the spring. The news sent the stock down 35% in one session. The decrease since the beginning of the year was 68%.

Netflix set the track at the start of the year by announcing the slowest growth in subscriptions for the first three months of the year since 2010, noting that “the growth in new subscribers has not been able to return to ‘pre-pandemic’ levels, which could attest to the rise of HBO Max.” and Disney+ and Apple TV+.

Added to these economic factors are attacks on their business model. Many of these tech giants have to do battle with regulatory authorities on different continents who accuse them of monopolistic practices or abuse of a dominant position, and the latest goal has been the free choice of app stores.

On the good side of the story, from 30 times earnings in the past 12 months through December 31 of last year, the Nasdaq’s P/E ratio is back to 23. For the Nasdaq 100, that ratio is 30, compared to 39 at the end of 2021 and 27 by the end of 2019.

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