Amazon and Google close their worst months on Wall Street since 2008

Getty Images; Chris Ratcliff | Bloomberg | Getty Images

Shares in Amazon and Google’s parent company Alphabet have just closed their steepest monthly decline since the 2008 financial crisis.

Internet giants both reported weaker-than-expected quarterly results this week, damaged by a combination of macroeconomic factors, the war in Ukraine and difficult comparisons with blowout figures during the pandemic.

Amazon fell 23.8% in April, the biggest drop since falling 25.4% in November 2008, the same month as Google plunged 18.5%. The alphabet had its worst month since then, with a fall of 18% in April.

During the first few months of 2022, investors have rotated out of technology due to fears of rising inflation and higher interest rates. Russia’s invasion of Ukraine in February, the rise in fuel prices that followed and a persistent shortage of labor have begun to hit corporate bottom lines.

The last time Amazon and Google saw this kind of sale was at the heart of the global financial crisis, with borrowers defaulting on mortgage rates at record highs and many of the best financial institutions going bankrupt. Lehman Brothers collapsed in September 2008, followed by a series of major Wall Street bailouts.

Tech stocks were crushed across the board. The Nasdaq fell 11% in November after falling 18% in October.

So far, this has been a mixed bag for the Big Tech class this earnings season. Facebook reported a profit that was better than expected, even though it missed revenue, and told investors that second-quarter sales could fall from a year earlier. Apple beat expectations but intimidated investors after warning that sales in the current quarter could be hit by supply constraints.

On Thursday, Amazon provided weak guidance for the current quarter, and growth rates stalled at their slowest since the dot-com bust in 2001. Earlier this week, Google missed out on sales and earnings, reporting a big loss in its YouTube segment, where revenue grew only 14%.

While both stocks have suffered so far this year, their prices diverged significantly in 2021. Alphabet was the best Big Tech stock of the year, up 68%. Amazon was the worst in the pack with a 2.4% increase.

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