Major technology stocks are taking a beating in 2022, with the NASDAQ 100 Technology Sector Index down 33.0 percent since the beginning of the year.
The NASDAQ is no aberration. The Dow Jones U.S. Technology Index is down by 29.6 percent, and the S&P 500’s Information Technology sector is down by 25.7 percent over the same period.
While the Dow Jones index overall was down 14 percent for the year at midday on Tuesday, Big Tech stocks were down even more.
Apple, which helped drive the historic stock market rise over the last decade, is down 24.1 percent. Google is down 28.1 percent, Amazon is down 39.4 percent and Meta, the parent company of Facebook, is down 47.2 percent.
Netflix, a company sometimes grouped with tech firms that is also considered a communications stock and is in many ways an entertainment company, is down 69.9 percent.
Just three of the 75 companies that make up the S&P’s information technology index have posted gains this year.
Here are five tech stocks that have posted some of the biggest losses by percentage in 2022:
PayPal: Down 60.0 percent
Financial technology company PayPal, which also owns Venmo, has posted the largest percentage drop in the S&P’s information technology index, with its stock price falling by more than half since the start of the year.
Most of PayPal’s earnings come from transaction fees on user’s purchases, placing a large reliance on consumer spending. Investors have worried about cuts in discretionary purchases due to high inflation.
Mizuho Americas’ analysts said in a February report that PayPal is seeing a “return to earth” following “the COVID sugar rush.”
On its earnings call in February, PayPal executives warned that its forecasts for revenue and new active users would not be as strong as hoped, and shares quickly fell by more than 25 percent, CNN Business reported.
“The persistence of inflationary effects on personal consumption, labor shortages, supply chain issues and weaker consumer sentiment have led us to adopt a more cautious outlook,” the company’s chief financial officer, John Rainey, said on the call, according to CNN.
Rainey will step down from the company in late May to join Walmart.
PayPal has also faced stiff competition from traditional payment companies, like American Express, Mastercard and Visa, as shoppers return to brick-and-mortar stores. Those three companies’ stock prices have all decreased by only single-digit percentage points, outperforming the overall market.
Epam Systems: Down 53.1 percent
Software engineering company Epam Systems has also seen large drops in its share price this year.
The company’s sales grew from roughly $300 million in 2012 to $3.7 billion today, but tough market conditions and the Russian invasion of Ukraine have led the stock price to drop sharply in recent months.
More than half of the company’s employees are located in Ukraine, Belarus and Russia. Shares plunged upon Russia’s invasion of Ukraine in February amid concerns about the company’s ability to continue functioning.
In March, the company announced it would discontinue services to customers in Russia as it created a $100 million fund to support its roughly 14,000 Ukrainian employees. Epam also said it was accelerating hiring in other countries to grow operations.
“The Russian invasion of Ukraine has changed the world and EPAM,” Arkadiy Dobkin, the company’s CEO, said in a statement earlier this month.
Meta: Down 47.2 percent
Meta, the parent company of Facebook, has seen one of the largest stock price drops among tech giants.
Its digital advertising business has been limited by Apple’s new features that allow iPhone users to limit companies from tracking them across apps. The features impair Meta and other companies’ ability to deploy targeted ads.
Meta has also reported slowing user growth on some platforms, detailing its first loss in daily active Facebook users near the end of the last year,
The company’s rebrand to Meta has given a glimpse of its metaverse ambitions.
Meta reported $695 million in revenue in the first quarter of 2022 from Reality Labs, the company’s hardware division that builds the Oculus Quest headset. The figure has grown from past quarters, but it remains a small fraction of the company’s total revenue.
“These investments are going to be important for our success and growth over time, so I continue to believe we should see them through,” Meta CEO Mark Zuckerberg said on an earnings call late last month.
Meta recently paused the hiring of some engineering roles and recruiters as part of efforts to control expenses, The Verge reported.
“With our current business growth levels, we’re now planning to slow the pace of some of our investments,” Zuckerberg told investors on the call.
Nvidia: Down 46.8 percent
Chip maker Nvidia has seen its stock price fall by more than 40 percent in 2022.
Semiconductor shortages brought on by the pandemic and supply chain bottlenecks have helped boost prices for chips. The company has posted record revenue in every quarter since the start of 2020, and the firm’s next earnings report is scheduled for Wednesday.
But even with industry sales increasing by more than 20 percent each month for almost a year, investors have raised concerns about surging inflation and higher interest rates since the industry is seen as more closely tied to the cycles of the economy, Bloomberg reported.
The PHLX Semiconductor Index is down by roughly 28 percent this year.
Nvidia has seen strong growth in its data center business, with last year’s fourth-quarter revenue up 71 percent from a year prior.
The company, known for its chips that support high-end computer gaming graphics, has also looked to enter the autonomous driving market and other artificial intelligence services. Nvidia announced a multiyear partnership with Jaguar Land Rover in February for its new vehicles beginning in 2025.
Zebra Technologies: Down 45.3 percent
Zebra Technologies, known for its barcode scanners and mobile printing, has faced one of the worst stock price drops in the technology sector. The company has largely struggled with supply chain issues.
Anders Gustafsson, the company’s CEO, said on CNBC earlier this month that the company has seen freight costs come down in recent weeks, but Zebra continues to struggle with shortages of semiconductor chips and other components.
“Component shortages, semiconductor shortages and we’re now spending a lot more money on securing long-lead time parts and having to expedite them to our facilities and then expediting the finished goods to our customer,” Gustafsson told CNBC’s Jim Cramer.
The company’s net sales increased in the first quarter of 2022 compared to last year, but quarterly gross profit fell from $655 million to $637 million. Gustafsson said in the earnings announcement that Zebra’s sales had exceeded expectations despite the challenges.