Elon Musk tried to defend Tesla’s miserable stock performance in 2022 this week. The electric vehicle giant has seen its stock plunge 61% this year, making it the 11th-worst performing stock on the S&P 500 for 2022.
“As interest rates on bank savings accounts, which are guaranteed, approach stock market returns, which are *not* guaranteed, people will increasingly shift their money from stocks to cash, causing stocks to fall.” Musk tweeted.
You might expect Tesla’s share price decline to have wiped out more investor wealth this year than any other stock in the world. But you would be wrong.
If we look at the drop in market cap — the value of companies’ outstanding common shares — Tesla TSLA was the fourth-worst performing stock in the benchmark S&P 500 this year at -0.17% as of 1:00 p.m. ET on December 21:
| Pursue | ticker | Change in Market Cap 2022 (Billion USD) | Intraday Market Cap on Dec 21 (Billion USD) | Dec 31, 2021 Market Cap ($bn) | Price change 2022 |
Amazon.com Inc. | AMZN, +1.85% | -$805 | $886 | $1,691 | -48% |
apple inc | AAPL, +2.38% | -$753 | $2,160 | $2,913 | -24% |
microsoft corp | MSFT, +1.09% | -$700 | $1,825 | $2,525 | -27% |
Tesla Inc. | TSLA, -0.17% | -$622 | $439 | $1,061 | -61% |
Meta Platforms Inc. Class A | META, +2.28% | -$466 | $318 | $784 | -64% |
Nvidia Corp. | NVDA, +2.59% | -$329 | $406 | $735 | -44% |
PayPal Holdings Inc. | PYPL, +0.65% | -$143 | $79 | $222 | -63% |
Netflix Inc. | NFLX, +3.39% | -$134 | $133 | $267 | -51% |
Walt Disney Co. | DIS, -0.11% | -$122 | $160 | $282 | -44% |
Salesforce Inc. | CRM, +1.44% | -$119 | $131 | $250 | -49% |
Source: FactSet | |||||
On a percentage basis, all of these stocks have underperformed the entire S&P 500, which is down 19% excluding dividends.
Amazon.com Inc. AMZN, +1.85% wiped out more shareholder wealth in 2022 than any other public company. Overall, Amazon investors lost $804.6 billion this year. The stock is down 48% in 2022.
Apple Inc. AAPL, +2.38% and Microsoft Corp. MSFT, +1.09% has also suffered larger market cap declines than Tesla due to its sheer size.
Companies have different fiscal and year-end times, but if we look at the data for the last three reported quarters and compare them to the same period a year earlier, you can see how the four stack up:
| Pursue | ticker | Change in revenue for three quarters compared to the same period last year | Change in EPS for three quarters compared to the same period last year |
Amazon.com Inc. | AMZN, +1.85% | 10% | N / A |
apple inc | AAPL, +2.38% | 6% | 2% |
microsoft corp | MSFT, +1.09% | 14% | -2% |
Tesla Inc. | TSLA, -0.17% | 58% | 169% |
Source: FactSet | |||
Amazon reported a net loss of $3 billion for the first three quarters of 2022 as the company neared the end of an extraordinary multi-year effort to expand its warehousing and fulfillment infrastructure. For the first three quarters of 2021, the company posted earnings of $19 billion. In announcing Amazon’s third-quarter results, CEO Andy Jassy said the company is methodically working toward “a stronger cost structure for future business.”
The incredible growth of Amazon’s cloud business has stalled, falling short of expectations the company had nurtured on Wall Street. The Amazon Web Services business is facing increasing competition from companies like Microsoft, and its customers are pulling out. Meanwhile, retail sales have also gotten off to a weak start in the Christmas and holiday season.
Amazon’s stock is down 22% since it closed at $110.96 on Oct. 27, just before disappointing investors not only with its third-quarter results but also with its outlook: It’s expected to… to break even in the Christmas quarter. Analysts polled by FactSet had previously expected earnings of more than $5 billion.
Tesla contrasts with Amazon, as you can see from the table above. Revenue soared 58% in the first three quarters of 2022 from the year-ago period, and earnings per share rose nearly three-fold.
This has been a year of significant declines for the shares of large tech-focused companies, particularly those trading at high price-to-earnings multiples — Amazon and Tesla belong to this group. In fact, these companies have given up all of their pandemic-era gains in the stock market.
But given Tesla’s stellar results for the first three quarters of 2022, how much of the electric carmaker’s stock price decline was related to Musk’s actions as CEO of Twitter, which he acquired on Oct. 27 after a? months of history? And how big could the recovery rally be for Tesla if Musk steps down as Twitter CEO as expected?
How about ground feeding?
Here’s the same list of 10 stocks in the S&P 500 that have seen the biggest declines in market cap this year, with a summary of analyst ratings, consensus price targets, and declines in their expected price-to-earnings ratios:
| Pursue | ticker | Share “Buy” reviews | Closing price on December 21st | Cons Target price | 12-month implied upside potential | Forward P/E as of December 20th | Estimated P/E as of December 31, 2021 |
Amazon.com Inc. | AMZN, +1.85% | 91% | $85.19 | $134.85 | 58% | 49.3 | 64.9 |
apple inc | AAPL, +2.38% | 74% | $132.30 | $173.44 | 31% | 21.4 | 30.2 |
microsoft corp | MSFT, +1.09% | 91% | $241.80 | $293.06 | 21% | 23.7 | 34.0 |
Tesla Inc. | TSLA, -0.17% | 63% | $137.80 | $272.64 | 98% | 24.6 | 120.3 |
Meta Platforms Inc. Class A | META, +2.28% | 63% | $117.09 | $145.45 | 24% | 14.5 | 23.5 |
Nvidia Corp. | NVDA, +2.59% | 68% | $160.85 | $195.72 | 22% | 39.2 | 58.0 |
PayPal Holdings Inc. | PYPL, +0.65% | 71% | $68.76 | $104.32 | 52% | 14.5 | 36.0 |
Netflix Inc. | NFLX, +3.39% | 47% | $288.19 | $302.89 | 5% | 28.4 | 45.6 |
Walt Disney Co. | DIS, -0.11% | 82% | $87.02 | $119.60 | 37% | 19.8 | 34.2 |
Salesforce Inc. | CRM, +1.44% | 78% | $128.45 | $195.18 | 52% | 23.4 | 53.5 |
Source: FactSet | |||||||
A majority of analysts see a golden path for 2023 for all of these stocks other than Netflix.
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