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Both internet giants reported weaker-than-expected quarterly results this week, affected by a combination of macroeconomic factors, the war in Ukraine and difficult comparisons with the exploding numbers during the pandemic.
Amazon fell 23.8% in April, its biggest drop since falling 25.4% in November 2008, the same month Google plunged 18.5%. Alphabet had its worst month since then, falling 18% in April.
Throughout the first few months of 2022, investors have steered away from the technology fearing rising inflation and higher interest rates. Russia’s invasion of Ukraine in February, the subsequent rise in fuel prices and continued labor shortages have begun to affect company results.
The last time Amazon and Google saw this type of liquidation was during the heart of the global financial crisis, when borrowers were defaulting on home loans at record rates and many major financial institutions were bankrupt. the lehman brothers collapsed in September 2008, followed by a series of big Wall Street bailouts.
Tech stocks were crushed across the board. The Nasdaq fell 11% in November, following an 18% drop in October.
It’s been a mixed bag for the Big Tech class so far this earnings season. Facebook reported a better-than-expected profit, though it lost revenue and told investors second-quarter sales could fall from a year earlier. Apple exceeded expectations, but scared investors after warning that sales in the current quarter could be affected by supply restrictions.
On Thursday, Amazon gave weak guidance for the current quarter, with growth rates stalling at their slowest level since the dot-com crash of 2001. Earlier in the week, Google omitted in sales and profit, reporting a big miss on its YouTube segment, where revenue grew just 14%.
While both stocks are suffering year-to-date, their trajectories diverged significantly in 2021. Alphabet was the Best performing Big Tech stocks of the year, increasing by 68%. Amazon was the worst of the packgaining 2.4%.