Apple shares have fared better than their peers over the past month, helping the company achieve a stunning feat: the digital giant is now worth more than Alphabet (Google’s parent company), Amazon and Meta Platforms (the company parent of Facebook) combined.
Apple ended Wednesday’s session with a market capitalization of $2.307 billion, according to Dow Jones market data. Alphabet, Amazon and Meta were worth a combined $2.306 billion.
The comparison was reported on Twitter by YouTuber funder Joseph Carlson.
The contrast illustrates the sharp decline in tech stocks this year. Apple was worth $2.913 billion at the end of 2021, according to Dow Jones market data. Alphabet, Amazon and Meta combined were worth $4.41 trillion at the time.
Apple shares have outperformed those of Alphabet, Amazon and Meta over the past month and throughout 2022 overall.
Apple shares are up 4.9% in the past month, while Alphabet shares are down 9.1%, Amazon shares are down 18.5% and Meta shares are down 33%. .3%. Since the beginning of the year, Apple shares have lost 18.3%, while Alphabet is down 40.5%, Amazon is down 44.7% and Meta is down 73%. .1%.
Apple stock also had a better start to the week than any of these other three Big Tech names, though all four were down.
All four companies each reported earnings last week, and only Apple’s numbers sparked a positive stock reaction. Since then, Meta has fallen below a $300 billion valuation for the first time since February 2016. The company was valued at $240 billion as of Wednesday’s close.
Earlier this year, Apple became the first company to hit $3 trillion in market capitalization, albeit briefly. The iPhone maker became a $1 trillion company in August 2018 and two years later became the first company to be valued at $2 trillion.
Under the leadership of Tim Cook, who in 2011 became chief executive after the death of Jobs, Apple has significantly increased its revenue from services such as video streaming and music. That helped Apple reduce its reliance on the iPhone to about 52% of total revenue in fiscal 2021, from more than 60% in 2018, satisfying investors who had feared the company would fail. relies heavily on its best-selling product.
However, some investors worry that Apple is reaching the limits of how much it can grow its user base and how much money it can make from each user, with no guarantee that future product categories will be as profitable as the iPhone.
The rapid adoption of technologies like 5G, virtual reality and artificial intelligence has also increased the appeal of Apple and other big tech companies.
In a December note to investors, Bernstein analyst Toni Sacconaghi warned that Apple’s prospects in the augmented and virtual reality category are promising, but are expected to represent only 4% of its revenue by 2030. Furthermore , the overall market for such devices is not expected to approach the billion-unit figure by 2040, he wrote.
Sacconaghi also didn’t see an obvious catalyst for a multiple expansion in Apple shares given the slower growth expected over the next fiscal year. There is a stock performance rating on the stock.
Another concern is the uncertainty over Apple’s ability to lock the same benefits for paid services into its future hardware. Its App Store business model, which charges commissions for in-app purchases of digital products, has been targeted by proposed legislation in the US and Europe.
The Fall of Meta
In February, Facebook’s parent company Meta dropped out of the world’s 10 most valuable companies (market capitalization) after a series of brutal setbacks in the previous weeks.
Mark Zuckerberg’s social media giant was estimated to be worth about $565 billion at market close on Thursday, February 19, a surprising drop from just a few months ago, when Facebook was ranked the sixth most valuable company in the world. .
Then Meta was ranked 11thME ranks behind other tech companies such as Amazon, Apple, Alphabet and Microsoft, according to Bloomberg. Tesla, Berkshire Hathaway, Nvidia, Taiwan Semiconductor Manufacturing Company and Tencent had all climbed the rankings. Tesla Inc., which had a market value of $906 billion, had overtaken Meta as the sixth-largest company behind e-commerce giant Amazon.com Inc. Berkshire Hathaway Inc. of Warren Buffett follows the $700 billion electric vehicle maker, followed by chipmaker Nvidia Corp. 613 billion dollars.
Shares had fallen more than 45% since hitting an all-time high of $384.33 in September 2021, wiping out more than $500 billion in market value during that time. The decline coincided with the release of a dismal quarterly report that showed Facebook saw its average daily user base decline for the first time in the company’s history. Zuckerberg blamed the stagnation in user activity on increased competition from rival platforms such as TikTok.
The meta lost more than $200 billion in value in a single trading day after the report, in what was the biggest one-day drop in the market value of any stock in US history, according to Dow. Jones.
Facebook was once a company worth over $1 trillion, thanks to its impeccable tracking system. However, Apple’s new feature that allows its users to choose to block ad trackers has neutralized this strength of Facebook. Even Facebook’s user base began to dwindle after a wave of whistleblower revelations showing the harmful effects of social media on young users.
And as if that wasn’t enough, Meta has done even worse: the company is no longer in the top 20 of the world’s largest market capitalization. The company has lost 70% of its value this year and 74% since the stock peaked in September 2021, representing a total loss of over $730 billion in market capitalization.
The value of Meta divided by three in one year, it is not yet time to reap the fruits of metasummers
Facebook’s parent company said it expects to generate $30 billion to $32.5 billion in revenue in the latest quarter, again falling short of Wall Street analysts’ expectations. As of September 2021, Meta’s valuation, which was then over $1 trillion, has now been divided by three and could drop further if bad results continue to pile up.
The shocking drop in Meta’s stock price is reminiscent of the days of the dot-com meltdown, but it’s far more significant when it comes to the wiped-out value of a single company. The decline began late last year as signs of a sluggish economy began to emerge, and accelerated in early 2022 after the company said Apple’s privacy-related change to iOS would result in $10 billion in lost revenue. this year.
Meta is affected by lower advertising revenue. But Meta’s biggest problem remains its gigantic investments in the Metaverse. His expenses have increased by 19%. The group continues to stake its future on the metaverse. Meta’s difficulties stem, for example, from its attempt to reinvent its business model to be less dependent on advertising, which brings in less and less revenue. For this, the company has put the metaverse, in which it swallows huge sums (no less than 21 billion dollars in two years). However, skeptical voices are being heard more and more as virtual reality tries to become more democratic and arouse the distrust of investors who doubt the ability of such an investment to generate short-term money.
I know many people do not approve of this investment. However, I think it would be a mistake for us not to focus on this area, which I believe will be of fundamental importance in the future, Mark Zuckerberg admitted during the conversation with financial analysts on Wednesday of last week.
Founder and CEO Mark Zuckerberg hasn’t been able to stop the bleeding and seems to be only making the situation worse. A somewhat confused Zuckerberg admitted on the investor call that there’s a lot going on right now at the company and in the world.
Mark Zuckerberg warned that the company faces short-term revenue challenges, but said the fundamentals are there for a return to stronger revenue growth. He reiterated his key bets, including developing a short video for TikTok’s rival, business messaging and the metaverse. He tried to reassure investors that investing in these areas would pay off in the long run. “I appreciate patience and I believe that those who are patient and invest with us will eventually be rewarded,” he said, arguing that the company was doing leadership work in the metaverse that would be of historic importance. .
It is the end of abundance for GAFAM as well. If the crisis caused by Covid has further inflated their dynamics, the current geopolitical tensions, unfavorable exchange rates and the already well-established economic crisis, in turn, have ended up affecting them. All of them had already announced a hiring hiatus this summer, and all have more or less started small waves of layoffs to better focus on the most promising and promising projects. But it is above all the outlook for the next quarter that is somewhat panicking in the financial markets.
What, in your opinion, can explain Apple’s stock market performance, despite the economic context and difficulties faced by other major technology vendors?
Are you surprised to see that Apple is worth more than Alphabet, Amazon and Meta in terms of market capitalization? Why ?
What do you think could explain Meta’s collapse? Elements to improve likely to make the company return to growth?
Are you convinced by the metaverse as an alternative source of income for the Meta?
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