Financial markets are plagued by the worst hit technology and software companies, along with cryptocurrencies. The U.S. Nasdaq Technology Index, which includes mostly large tech companies, has fallen to 28 percent in the last six months, of which 15 percent has been lost in the last month alone.
The most valuable company in the world, the technology giant Apple, has paid for the technological disgust. The company’s stock fell 10.5 percent last week, and was first replaced by Arab energy company Aramco. The Arabian state giant is now worth $ 2.42 trillion (58.13 trillion crowns).
In addition to the largest technology companies, bitcoin, the world’s largest cryptocurrency, has hit hard. In the last five days, it has lost nearly 20 percent and its value has dropped to $ 28,000 per bitcoin (680,000 crowns).
The value is also declining for software companies that thrived during the pandemic. While the vast majority of companies have relied on losses in the past two years, the area of so-called e-commerce has thrived. For example, the shares of Netflix’s American streaming service have more than doubled since the beginning of 2020, only to fall below the pre-pandemic level from January this year – to $ 166 per share (4 thousand crowns ). This is a 75 percent drop in the last six months.
The problem with software stocks is that many of these companies do not report real profits. Peloton, an Internet-connected sports equipment company that was popular with traders at the beginning of the pandemic, has lost 90 percent of its value since the beginning of last year. Its market value fell from $ 1.13 billion to $ 96 billion.
Ideal opportunity to buy … or not?
“These losses are probably the strongest indicator that the pandemic bubble burst and more customers are moving out of digital services and experience in the real world,” Emily Bowersock Hill, chief executive officer of Bowersock Capital Partners, told the Times .
In such cases, it might seem like a unique opportunity to buy shares at a fractional price. However, extreme growth in the short term and uncertain earnings of these companies warn. “We’ve seen very little this year compared to last year,” Randy Frederick, vice president of trading and derivatives for Charles Schwab, told Bloomberg. “They just went down,” he said.
In the previous two years, records were broken not only by software companies, but also by the number of companies listed on the exchange. In the so-called IPO (the first public offering) listed 1,035 companies in 2021, according to stockanalysis.com. This is 120 percent of the more than 480 companies that entered the U.S. market the year before – and even this was a record for the IPO.
At the same time, however, the data show that the vast majority of these companies have lost value since entering the stock market. Only a few tens of thousands managed to increase their value.
According to Robert Cantwell, portfolio manager of the Compound Kings ETF, the solution to this situation is consolidation, ie merging or taking over one of the largest digital companies. “Takeaway and Doordash are consolidating, Uber is trying, but those companies won’t be profitable until the number of players on the field is reduced,” he told Bloomberg. “They’re fighting for the same thing – people. They’ve taken people as a commodity, but as it turns out, people are a bigger opinion. Now he has to find a way to make his business model profitable.”
An example of a seemingly dreamy entry into the stock market, which turned into a nightmare, can be, for example, the electric car manufacturer Rivian. The U.S. car went public on the Nasdaq stock exchange last November and its market capitalization at that time amounted to $ 105 billion (2.5 trillion kroner). The company, which had not yet sold a single car at the time of its launch, was more valuable than Daimler or General Motors when it was launched, and was able to boast the status of the world’s fifth most valuable car.
However, when it announced its results for the first quarter of this year, investors were probably not so enthusiastic. The company’s losses reached nearly $ 1.6 billion (38.5 billion kroner) and it has produced only 5,000 cars since the start of production last year.
The situation on the technology market is so still uncertain, with the expected increase in interest rates by the US Federal Reserve, it is uncertain when it will calm down.
“This can be interpreted as meaning that investors are constantly struggling for asset prices and the effects of the sharp sharp reversal of monetary policy on stocks and other risky assets. We will witness similar violent movements in both directions on The wallets in the future are predictable, “Tomáš Pfeiler, an analyst at Cyrrus, told SZ last week.