3 stocks to watch as they exited the trillion-dollar club
- The Fed's tightening of financial conditions led to a sharp selloff in the tech sector
- 3 companies have left the trillion-dollar club - is this temporary or permanent?
- Meta Platforms share price had one of the most dramatic bearish run in recent history
$1 trillion is an insane amount of money for governments, let alone companies. Yet, the last few years saw several public companies breaking the threshold.
It all started with Apple, the tech giant company. Its market capitalization exceeded $1 trillion for the first time in August 2, 2018. Microsoft, Alphabet, and Aramco followed, as well as Amazon (NASDAQ:AMZN), Tesla (NASDAQ:TSLA), and Meta Platforms (NASDAQ:META).
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But the last three exited the exclusivist club recently. At the start of November, Amazon’s market cap dropped to $911 billion and Tesla’s to $675 billion.
Even more dramatic was Meta’s fall out of grace. Its market cap melted to “just” $236 billion.
Are these three companies a good buy now that the stock market bounced after the latest CPI report?
Amazon dropped -42.33% in 2022 so far as investors reacted to the Fed’s tightening of financial conditions and punished tech stocks trading at sky-high valuations. Most recently, Amazon launched a review of unprofitable businesses with the intent of cutting costs.
Even after dropping so much this year, Amazon’s stock price still trades at a 9.58 PE ratio (TTM). The recent bounce brought Amazon back to the trillion-dollar club – but for how long?
Tesla is well off its all-time highs. It currently trades just below $200/share after reaching above $400/share during the COVID-19 pandemic.
However, the bearish price action does not necessarily reflect the company’s financial position. Because Elon Musk, Tesla’s CEO, had to sell Tesla shares to fund Twitter’s acquisition, any bounce in Tesla’s stock price was sold aggressively.
The technical picture remains bearish, nevertheless. A head and shoulders pattern might be spotted, with the neckline being retested recently. If the price follows what the pattern suggests, then Tesla will have difficulty climbing back to the trillion-dollar club.
Perhaps one of the most dramatic declines in the tech sector is the one of Meta Platforms. At the peak, it traded close to $400/share, but it recently dropped below $100 before bouncing.
Meta’s finances deteriorated after the company’s bet on the metaverse. It recently announced that it is letting go 13% of its workforce, and it will be interesting to see what the next quarterly earnings reveal.
Meta is not paying any dividends, and it currently trades at 2017 levels.