Big tech wreck: $141 billion in losses and counting

December 7, 2018 9:00 am


Tech giants have not had it easy this year. Facebook, Apple, Amazon, Netflix and Google, known collectively as FAANG, have taken a beating at the stock market, losing billions of dollars on Tuesday.

Where do each of these giants stand, and who are the winners and losers?

Billions already lost

The news has spread through the market like wildfire: FAANG lost $141 billion in market capitalization on Tuesday, with an average share price drop of 4.5%. FAANG stocks came crashing down a day after they had made some gains on Monday.

“Tuesday’s sell-off added another chapter to a fall that couldn’t have gone much worse for some of the world’s most famous technology companies,” Statista said. “Fears of new tariffs, slowing growth and stricter regulation have changed the market environment for the worse over the past few months, pushing all the FAANG stocks into or to the edge of bear market territory.”

With the ongoing US-China trade war, everything is up in the air. Investors are worried, and the numbers reflect that.

(Graph by Statista)

Each of these companies has been facing their own set of challenges and difficulties – some more than others.

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Biggest 24-hour losers

All 5 companies are losers in traditional terms, though some more than others. Others are taking a hit but are dusting themselves off and getting right back up.

Amazon fell 5.9%, losing $50.8 billion in implied market value

Netflix fell 5.2%, losing $6.5 billion in implied market value

Alphabet (Google) fell 4.8%, losing $37.5 billion in implied market value

Apple fell 4.4%, losing $38.5 billion in implied market value

Facebook fell 2.2%, losing $7.6 billion in implied market value

(Data by CNBC)

(Graph by Statista)

Top 2 still in the black

Out of all FAANG investors, Amazon showed the greatest loss caused mainly by a Donald Trump panel that is pushing for higher postal service prices in light of recent losses for the national service.

In October, Jefferies analyst Brent Thill estimated a proposed 2019 postal rate increase will add roughly $700 million in expenses for Amazon, Barron’s reported.

As for Netflix, Barron’s explains that “the company’s skeptics have worried about the rising costs of content and its financial position. Netflix has burned through $2.2 billion in cash over its previous four quarters. As of the end of the third quarter, it had long-term debt of $8.3 billion and $18.6 billion of content obligations.”

Investment guide site The Motley Fool (TMF) has also attributed Netflix’s market cap loss to investors who have taken gains after the stock’s sharp run-up in recent months.

Yet, despite all these losses, CNBC believes Amazon and Netflix will be fine, as each are up more than 40% year-to-date despite getting caught in the rout.

TMF said: “Even after the stock’s 28% decline since Oct. 1, Netflix shares are up an impressive 47% over the past 12 months.”

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Facebook: 2018 loss column

You can’t really discuss controversy in 2018 without Facebook coming up in the conversation. With an image fluctuating from being the poster child of social media in the late 2000s, to an evil corporation out to monetize your personal data, Facebook has had a very rough 2018.

Starting with the Cambridge Analytica scandal, and recently gaining notoriety again when 50 million user accounts were hacked, Facebook stocks have suffered.

Share value fell 2.2%, losing $7.6 billion in implied market value, according to CNBC. On its own, this might not seem like much. Given the overall year, however, this is very troubling. They reported that stock slumped 23.8% since mid-March when the Cambridge Analytica scandal came to light.

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Apple: Rotten year

(Graph by Statista)

Following news of reduced smartphones shipped in Q3 2018 year-on-year, as revealed by IDC, and lessened hype for the iPhone, Apple has had a tough run. To make matters worse, it was unseated from 2nd place in terms of global smartphone sales by Eastern rival Huawei.

Last month, CNBC noted that November was the company’s worst month of trading since the financial crisis in 2008. This comes as a surprise, given that the new iPhones had just been released a mere 2 months earlier. It has also lost more than $100 billion in market valuation, dropping from its historic $1 trillion market value.

That same month, Apple announced that it would no longer disclose unit sales for their products, in a conservative move that has not boosted investor faith.

As of this writing, Apple’s market cap is resting at $829.59 billion.

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Alphabet (Google’s parent company)- Stuck in neutral

While Alphabet has not escaped scot-free, with stocks falling 4.8% and losing $37.5 billion in implied market value, CNBC explains that the company “is hanging onto modest year-to-date gains, up just 0.8% in 2018.”

Google is a huge company with its hands in many different cookie jars, so to speak. It has invested in smartphones, automated cars, AI, Android, YouTube, and always has its trusty search engine to fall back on. Unlike the more specialized companies in FAANG, Google is one of the most diverse, if not the most. This means that they can hold their ground much better than the other firms.

Total yearly losses so far

Combined market capitalization losses since their 52-week highs hit $1.02 trillion on Tuesday:

Facebook: $253 billion

Amazon: $280 billion

Apple: $253 billion

Netflix: $67 billion

Google/Alphabet: $164 billion

(data by CNBC)

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Mark Anthony Karam
By Mark Anthony Karam
Journalist
Mark Anthony Karam has 3 years experience in the field of visual and written media, having earned his Masters degree from the UK. You can get in touch with him here: [email protected]



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