November 30, 2022

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More than 2,600 billion Norwegian kroner evaporated - E24

More than 2,600 billion Norwegian kroner evaporated – E24

Microsoft and Alphabet delivered disappointing results yesterday, and today billions of dollars have evaporated on Wall Street.

Robert Ness was sitting on Alphabet stock when the price crashed.
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Both giant companies, which are among the most valuable on Wall Street, were hit with severe penalties.

At the close of the exchange, Alphabet A stock rose 9.63 percent, and Microsoft stock fell 7.72 percent. For Alphabet, this is the largest drop since March 2020.

Investor and fund manager Robert Ness runs the Nordea Stabile Aksjer Global Etisk Fund, which has invested in shares in Alphabet.

– The drop in value is down to very large numbers – more than the value of the entire Equinor, Næss told E24 shortly after the US exchange opened.

Robert Ness, Director at Nordea.

Næss estimates that a market capitalization of NOK 2,800 billion evaporated in the opening minutes at the two companies.

At the time of closing, the decline in the value of the two companies corresponds to a total of about NOK 2,600 billion, E24 accounts show.

It’s only fair that they fall. Ness said earnings expectations are falling somewhat, and the stock is in line with that.

He noted that Microsoft is priced at 23 times earnings, and therefore one would expect more growth than it provided yesterday.

Why is the market surprised by this?

Investors may think two ways: they may think that this good earnings picture can’t be sustained, but they also listen to individual companies. In the past, companies have told analysts that things have gone well, and then the analysts have followed through on the company.

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Oljefondet is a major owner in both companies. At the beginning of the year, the fund held positions in two companies worth 300 billion in the two companies.

It is possible that the oil fund has changed something in their positions since the new year, but if today they hold about the same as they did before, the value of the positions is now NOK 17 billion less.

Microsoft did not convince investors with its latest quarterly report.

Pushing hard in all areas

Danske Bank’s chief strategist, Anders Johansen, says there are several factors contributing to the pullback.

Microsoft has benefited from growth around cloud services and home office during Corona. But now there is uncertainty about the extent to which companies will spend less money and sell fewer computers.

Consumers all over the world are under severe pressure in all areas. Perhaps most of it is in Europe and Asia with high energy prices, but also in the United States. And the Microsoft moment is a strong dollar. So any earnings they have outside the US will be lower. One problem, he adds, is that goods become more expensive in a world where consumers have less money to spend.

Anders Johansen, Chief Strategist at Danske Bank.

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Alphabet is also down, down 9.63 percent at the close of the stock exchange.

Uncertainty about earnings and advertising revenue contributes to this, Johansen says.

– Alphabet’s main earnings are advertising. There is uncertainty about the future growth of the global economy in general, and then you cut costs where you can. Then he says online advertising is a natural place to start.

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Alphabet-owned Google generated disappointing advertising revenue.

Alphabet owns both Google and YouTube, both of which have had disappointing ad revenue.

Johansen also points out Explode, Explode Last week it presented a quarterly report that also showed lower than expected ad revenue.

The Facebook Meta owner is also set to present its latest numbers after closing time on Wall Street on Wednesday night, and the stock was at the time of writing more than 7.85 percent in after-market trading.

This is what it looked like on Wall Street’s main indexes at the close on Wednesday night:

  • The Dow Jones rose 0.01 percent
  • The Nasdaq is down 2.04 percent
  • Standard & Poor’s 500 down 0.74 percent