- A Brokerage Avenue survey commissioned by E-Investidor indicated that the five biggest declines in company stock prices in the New York Stock Exchange’s S&P 500 Index in this year’s cumulative score were from technology-related companies.
The monetary tightening cycle has severely punished technology companies in the North American market. In the opinion of analysts, the scenario represents market risk aversion in the face of rising inflation and interest rates in the US. Despite this, Brazilians are still interested in the roles of the big tech companies.
Survey conducted by Avenue Brokerage on request e-Investor He noted that the five largest declines in the stock price of companies listed in the New York Stock Exchange’s S&P 500 index in the cumulative score for the year were for companies related to the technology sector.
The streaming platform Netflix (NFLX) took first place in the ranking. During the period, the company’s stock melted 71%. Soon, PayPal (PYPL) comes along, with a 60.6% drop.
The main factor for the devaluation of companies is the rise in interest rates in the United States. Although it is a tool to fight inflation, the rally encourages the market to adopt risk-averse behaviour. Therefore, technology stocks tend to be the most vulnerable to penalties due to higher growth expectations.
Avenue strategist Guilherme Zanin recalls that most companies in this sector need funding to help ensure promised results for the coming years. As interest rates rise, access to money becomes more difficult.
He points out that companies find it difficult to pass on the increase in their costs to the final consumer in times of high inflation. With low purchasing power and great market competitiveness, profit margins decrease.
This is the case with Netflix (NFLX). In its balance sheet release for the first quarter of this year, the streaming platform recorded a loss of subscribers for the first time in 10 years. According to the company’s report, about 200,000 subscriptions were canceled during the first three months of 2022. As a result, the shares fell by about 30%.
“Netflix has already been on a declining basis. But with the opening of economic activity after the pandemic, the company has shown that it cannot grow its customer base and that competition has reached a significant extent, Zanin explains. According to him, the streaming giant indicated in its report that YouTube is the main threat for its business model.
The 10 companies that recorded the biggest declines in the S&P 500 Index
Year-to-date return on stocks *
|Alignment Technology (ALGN)||-60.51%|
|EPAM Systems (EPAM)||-55.94%|
|Seridian HCM Holdings Corporation (CDAY)||-50.29%|
|Under Armor (UAA)||-49.79%|
|IDEXX Laboratories (IDXX)||-47.16%|
|Zebra Technologies (ZBRA)||-46.79%|
|source: Guilherme Zanin – Avenue Strategist / * Accumulated data for the year up to 05/12/2022|
Apple is no longer the most valuable in the world
Apple’s (AAPL) case well reflects the “loss” of value in the technology sector. The iPhone maker lost, on Wednesday (11), the position of the world’s most valuable company to the Saudi oil company Aramco.
The market value of the Saudi company reached $2.4 trillion, while the devaluation of the American company reduced its market value to $2.3 trillion.
Plus the market penalty on the bonds TechniqueThe upward movement in commodities brought a favorable scenario for Aramco. “The only sector that has survived in recent months in the US market and the rest of the world is the energy sector, which includes oil and gas. It was a very late sector in previous years and it regained this loss,” confirms Enzo Pacheco, an analyst at Empiricos.
Another difference that justifies the change to the platform, according to Fred Nobre, head of the Warren Analysis District, is that the oil company is the world’s largest oil exporter, responsible for meeting about 12% of global demand for the commodity. . “It is a very closely related company that is increasing its production capacity, unlike the rest of the other companies in the world that have reduced capital expenditures (investment indicator) in recent years,” Nobre says.
Is it worth buying at a low price?
Even with the rate hike, big tech stocks remain among the assets most sought after by Brazilian investors in April and May. According to a survey conducted by the Apex Fintech Solutions platform in partnership with Inter Invest, sent exclusively to e-InvestorTesla (TSLA), Meta (FBOK34), Amazon (AMZN), and Apple (APPL) are among the top 5 most sought-after assets by Brazilians on US stock exchanges.
“It’s the most famous company and it showed very big differences. Therefore, a lot of people saw an opportunity to buy shares,” says Philip Bottineau, director of Inter Invest.
Companies and ETFs are most sought after by Brazilian investors in April and May
|The second||Target (FB)|
Vanguard Total Global Equity Fund – ETF (VT)
|Source: Apex / Inter Invest / * Search between 04/01/2022 to 05/10/2022|
Analysts point out that investors need to analyze the company’s details to determine whether there are good fundamentals in its operations and whether the company has presented attractive numbers on its recent balance sheets.
From this perspective, Zanin believes that Apple (APPL) and Alphabet (GOOGL), the holding company of Google, are examples of technology companies with high growth prospects, but with strong cash flow.
“Google revenue grew over 20% and Apple grew over 10% (in Q1 2022). Nvidia (NVDA) is another case. To give you an idea, it’s a company that is growing on average from 30% to 40%. annually,” quotes the Avenue strategist.
False: The initial version of the text, published at 10 a.m., stated that the 10 largest declines in the S&P were in the technology sector, which is also shown in a table. However, the previously published table showed the 10 biggest declines for the S&P tech sector, not all sectors. Table and text have been corrected.