Technology stocks have been bleeding in 2022, share prices of some companies touted as winners in the so-called metaverse have more than halved in some cases.
The selloff also comes at a time when the Nasdaq Composite index has formed a “death cross” chart pattern, meaning its 50-day moving average has dropped below its 200-day moving average.
The Nasdaq already has slid 16% from its Nov. 19 closing high.
Meta's (FB) stock price has dropped nearly 40% so far this year. From a market cap of $776.9 billion on December 31 the tech giant has fallen to $476.2 billion as of Friday's close. Basically, just over $300 billion in market capitalization has vanished in less than two months.
The Facebook parent's latest earnings report has cast a shadow of doubt on its growth potential and sparked the biggest selloff in Wall Street history in terms of value erased.
Meta's fourth quarter earnings missed analysts' expectations while noting slower user growth rates and a pullback on advertising budgets.
Meta is also reeling from the impact of changes to Apple's (AAPL) privacy controls which are estimated to cost the social media company $10 billion in 2022.
Separately, damage to videogame platform Roblox (RBLX) has been worse. The share price for Roblox has dropped 51.8% in 2022 from $103.16 to $49.72. Its market cap has plunged to $26.5 billion last week from $55.1 billion.
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Concerns Linked to The Growth of Tech
In November, last year, both these companies were among top picks by investment firm Wedbush as candidates that can benefit from growing adoption of the metaverse concept.
The metaverse is described to us as a virtual world in which we will interact with each other through our avatars and using virtual reality headsets and other technological tools.
Last week, Roblox posted lower than expected fourth quarter earnings and further added to investor distress about its ability to grow users as the pandemic fades.
But Real Money's Mark Sebastian added that Roblox will find its path because it is an interesting acquisition target for big tech like Alphabet (GOOGL) or Microsoft (MSFT) and "is still a really good company, despite the bad earnings."
Chip giant Nvidia's (NVDA) stock has dropped almost 20% this year to $236.42. Its market value has fallen to $588.6 billion from $732.3 billion.
Despite the failure of its deal to acquire U.K. chip-design company Arm, Nvidia posted record fourth quarter sales led by rising demand for its videogames and data center offering.
Nvidia posted adjusted earnings per share of $1.32 on revenue of $7.64 billion for the quarter. These numbers add up to earnings growth of 69% on sales growth of 53%, and exceeded the street on both the top and bottom lines estimates.
Streaming major Netflix (NFLX) has lost 35% in share price to $391.2 million since December 31. Its market cap has shrunk to $173.7 billion from $267.4 billion.
Amid concerns of slower growth, Netflix missed its subscriber estimate for the fourth quarter by a whisker, adding 8.3 million subscribers instead of the projected 8.5 million.
The company expects to add another 2.5 million subscribers in the current quarter, compared with four million in the same period a year earlier.
Roku (ROKU) has lost 50% in share price this year and was trading at $112.46 at Friday's close. Roku's market cap fell to $13.2 billion from $26.8 billion since December 31.
Roku, last week, posted weaker-than-expected fourth quarter earnings and a sharp slowdown in revenue growth.
The company's revenue growth has also slowed dramatically from earlier in the year -- in line with the decrease in subscriber growth seen from the likes of Netflix and Disney (DIS).
