Investors have moved from extreme to extreme since the bear market began at the end of 2021 although, in percentage ratio, it rivals the crisis of 2008 or the year 2000.
The S&P 500 peaked in November 2021 until it bottomed out in October 2022, nearly twelve months later, with drawdown percentages ranging from 21% to 37% across those three benchmark indices. They have been bouncing for three months but it was now in January when the change in appearance can be clearly seen.
In general, the large technology companies have represented the pendulum movement on the stock market like few other companies and, in particular, three companies that have monopolized the spotlight due to their size, mass of shares and leadership in their products. The leader of the ‘streaming’ Netflix, of the social networks Meta Platforms and the manufacturer of electric vehicles Tesla Motors. All three were labeled bubbles and burst at the first opportunity with the change in the monetary cycle and the downward turn in the market because their valuations were based on ‘always-high-growth’ figures.
The Netflix movie with a happy ending
Netflix was evicted from the investors’ portfolio in October 2021 due to the first doubts about the growth of its million-dollar subscriber base, about the profitability of its business and due to the growing competition posed by rivals such as Disney +, Prime Video and HBO for the cake of customers who pay for video on demand.
After successive ‘profit warnings’ between the end of 2021 and the beginning of 2022, the company founded by Reed Hastings achieved a notable drop in customers after erasing Russia from its map of operations. In just six months it had gone from trading around $700 a share to less than $180. Its stock valuation of more than $300 billion had dipped below $100 billion for the first time since 2017.
Netflix began to deploy a battery of measures to recover growth in a medium-term plan that it is finishing implementing now. In addition to price increases, the launch of a cheaper service but with ads, the platform declared war on shared accounts. The launch of the last season of Stranger Things became the turning point for the platform, which once again pointed the finger at subscriber growth by 2022. Its share has doubled since then, from 180 to more than 360. dollars now.
Meta has friends among investors again
A similar case has been carried out by Meta Platforms, the parent company that owns Facebook, Whatsapp and Instagram, directed by Mark Zuckerberg with Javier Oliván from Huesca as his number two. The social network holding company saw how its stock market crisis occurred when it generated more income and more money managed to bring profit. Investors panicked about the impact on the company of the lock that Apple imposed on its tracking systems within the iPhone and iOS ecosystem. In addition, Wall Street began to see how the losses and investments associated with the technologies of the metaverse multiplied in the Meta accounts.
The share price of the owner of Facebook peaked in September 2021 at around $380 and ended up crashing on November 4, just ten months later, below $90 amid a climate of chaos surrounding the future of the company. . It represented a stock market crash of 76% and, in absolute numbers, almost 800,000 million dollars less on the stock market. However, the bottom in the market came just days after Zuckerberg announced the first layoffs in the company’s history. In just two months, everything seems to have changed in terms of the price, which is once again moving close to $150 and accumulates a 69% climb.
Tesla takes off again with its cars
What few expected was that Tesla was going to join the great stock market rally of the Wall Street technology companies due to financial doubts and dark clouds over its plant in Shanghai, which has suffered several confinements throughout 2022. However, the manufacturer has It demonstrated this week that it is immune to what happened in China after the opening of the two gigafactories in Texas and Berlin in the middle of last year. Its manufacturing, delivery and sales figures once again fit into the models of its shareholders.
The break in Tesla’s price has perhaps been the greatest due to the confusion that its founder, president and main shareholder, Elon Musk, generated every day, day in and day out, who seemed determined to hit the company with statements out of place, massive sales of company shares and with an obsession that is still active: Twitter. The richest man in the world decided that he wanted to buy the social network that he used every day and through which he agitated both the prices of cryptocurrencies and Tesla itself. In fact, a tweet of his from 2018 has brought him to court.
However, the big earthquake at Tesla occurred when Musk began to sell shares massively a year and a half ago. Since then he has sold nearly $50 billion worth of stock, a record in Wall Street history for an individual. The price was hovering above $400 in November 2021 and the company was vastly in excess of $1.3 trillion in market size.
Just a month ago it hit bottom around 100 dollars per share, accumulating another historic 75% and falling a trillion dollars less in capitalization. What has happened since then? Another turn of events around forecasts. Tesla accumulates a revaluation of 60% on the stock market, up to $160, after the last stretch of 10% after presenting its annual results. The manufacturer has once again surprised positively and now investors have faith again.
