Tech companies have faced a challenging and volatile year as the values of their shares have fallen.
Six mega caps, including Amazon, Apple (AAPL), Alphabet (GOOG), Microsoft (MSFT), Meta (META) and Tesla (TSLA), have combined market cap losses of more than $5 trillion this year, according to Bespoke Investment Group, a Harrison, New York-based investment company.
Apple has lost $880 billion, while Alphabet is down $846 billion. Meta and Tesla have both declined by more than $760 billion and Microsoft declined by $784 billion "even though it was down close to a trillion at its lows in November," the company wrote.
But one company stands out from the crowd. Amazon (AMZN) set another dubious record when it became the first mega cap company to lose over $1 trillion in market cap on Dec. 20.
A tech behemoth, Amazon had benefitted from the pandemic as consumers stayed at home and purchased more items since less of their money went towards dining out, traveling or other leisure activities such as entertainment.
The tech industry has suffered as investors sold their shares, wiping out trillions of dollars in valuation.
Amazon's shares could wind up yielding their worst year of performance since the crash of 2000 when the Internet seller's stock fell by 80% as the dot-com bubble burst.
The U.S. stock market has seen an $11.7 trillion drawdown from the peak on Jan. 3, 2022 when the Russell 3,000 is used as a proxy, Bespoke wrote in a blog post.
"The max drawdown was $13.6 trillion at the low on 9/30, so we've seen market cap increase by just under $2 trillion since then," Bespoke wrote. "In dollar terms, this drawdown has been more extreme than anything investors have ever experienced. That's pretty deflationary if you ask us!"
Fears of a recession have risen due to rising inflation rates and a global slowdown resulting in lower economic growth.
Tesla Shares Fall Over 50% in One Year
Shares of Tesla have plummeted as its CEO Elon Musk has turned his attention to his $44 billion acquisition of Twitter.
Shareholders of the electric vehicle manufacturer have grown increasingly dissatisfied with Musk's actions and lack of attention.
Tesla shares are now trading at $138.70 or 55.95% off their levels a year ago. The stock has declined by 17.91% during the past month alone.
The company's market cap reached only $431.79 billion on Dec. 20, compared to $1.13 trillion on Dec. 31, 2021 when the stock traded at $352.26.
Since Musk took Twitter private, he appears to be focused intently on the social media platform, spending his time attacking his supposed enemies and banning or suspending accounts of journalists who cover him or his company. He has continued to create controversy on a regular basis.
Since Musk bid for Twitter in April, Tesla’s stock dropped by 55.2%. Musk finalized the deal on Oct. 27, which is less than two months ago. Tesla’s stock lost 33.3% of its value during this short period.
Tesla now trades at a similar forward price to earnings as Hershey and a lower forward multiple than Clorox (CLX) and Costco (COST), according to data from Bespoke.
The stock market has lost $11.7 trillion in market cap on Dec. 20 from its high on Jan. 2, 2022.
