Macro conditions were troubling for tech stocks even before Russia decided to invade Ukraine, but the slide has only gotten worse in 2022.
Inflation hitting 40-year highs and the Federal Reserve (Fed) hiking rates and promising to pile on more has seen market participants flee high-growth tech names, cementing the Nasdaq as one of the worst performing indices this year.
It seems that utilities and energy are the only sectors that investors are finding some solace from the losses, which speaks volumes about the sour mood in the markets, while tech stocks seem rancid for investments.
Notably, year-to-date (YTD), among the top 10 worst performing large-cap stocks in 2022, all ten are from the tech sector, on average losing 69%.
SNAP is the worst of the pack
Tightly contesting SNAP for the first spot is the crypto exchange Coinbase (NASDAQ: COIN), which lost over 75% YTD with a poor outlook as news of a possible probe by the securities and exchange commission (SEC) surfaced.
The third place is occupied by Shopify (NASDAQ: SHOP), down over 74% YTD; despite the stock split, the interest of investors seems to be weakening. Unity Software (NYSE: U) is in fourth place, sliding by 73.9% YTD, followed by Twilio (NYSE: TWLO), down by 67.8%, rounding up the top five large-cap stocks with the most significant losses in 2022.
Headwinds all around
New worries seem to spring up almost every month; investors are getting battered pretty heavily from rising inflation, higher rates, and geopolitical conflicts.
Despite the run, stocks have seen post-pandemic market participants are more focused on the short-term and what inflation and rising rates will do to a company’s earnings, which could be one of the reasons they bailed on large-cap tech stocks.
Finally, market participants should center on what they’re buying, focusing on the future free cash flows of a business, the quality of the management team, and the moat around the company.
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