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Look at what's happening on Nasdaq: Facebook is already worth twice as much - voila! money

2023-05-11T11:55:43.278Z

Highlights: Shares of technology companies, which have suffered declines, are getting a boost. For example, Meta (Facebook), which since the beginning of the year has almost doubled its value. But does the spring wind experienced by big tech stocks herald investors' migration back to the stock exchanges? And what do those increases say about the possibility of a global recession?Technology stocks May 2023 (Photo: Walla!, None)Recession rumors were premature according to an analyst at Oppenheimer Investment House.


Shares of technology companies, which have suffered declines, are getting a boost. For example, Meta (Facebook), which since the beginning of the year has almost doubled its value


Facebook, WhatsApp, Instagram or in short: Meta. After a tough time and layoffs, Zuckerberg is back smiling (Photo: ShutterStock, Ink Drop)

The buzz around artificial intelligence, AI has spawned a lively international public discourse and reminded us all that the future of humanity is in the hands of technology and its developers, and has brought some of the spring wind back to the sails of technology companies traded on Wall Street in the US.The

five American tech giants traded on the NASDAQ US stock exchange, for example, have risen by about 40% on average since the beginning of the year until their examination (see table).

The increase was led by Meta (formerly Facebook), whose stock jumped 93.92% in the period under review, nearly doubling its value to about $590 billion.

The tech giants were the main beneficiaries of the spring investor booms and with considerable differences. For example, the Nasdaq and S&P500 US indices rose 16.36% and 7.28%, respectively, during the same period.

But does the spring wind experienced by big tech stocks since the beginning of the year herald investors' migration back to the stock exchanges? And what do those increases say about the dire outlook regarding the possibility of a global recession?

Technology stocks May 2023 (Photo: Walla!, None)

Recession rumors were premature

Sergei Vaschunok, a senior analyst at Oppenheimer Investment House, explained to Walla! "In recent months, there has been moderation in the inflation rate, which peaked about a year ago.

The inflation rate is still relatively high historically, but it has been declining since then, and this is one of the parameters that contributed to growth companies in general, and to technology giants specifically, because it brings investors' gaze back to the future.

It should be remembered that the discourse last September was around an expected recession, and already from the end of 2022 and the beginning of the year it was already possible to feel that this was not the direction. Moreover, in practice, there may still be some kind of economic slowdown, depending on where in the world, but there is no recession.

All this contributes to the growth companies, and to this must be added the financial results presented by the large technology companies, which continued to show growth in the form of increased revenues.

Moreover, the companies managed to overcome various problems that began to arise in the way they conducted themselves during the COVID-<> period, and carried out streamlining in the form of laying off employees, halting recruitment of personnel, and halting salary increases, which contributed to profit and showed improvement in the companies' results.

In addition, the money that migrated towards value stocks in the finance and energy sectors, for example, due to inflation and interest rates, returned again towards growth stocks after various problems began to arise in the heads, in the form of the fall of bank shares, which still reverberates, and long lines to connect projects to the electricity grid in the US.The companies took advantage of the coronavirus to raise funds, manpower, and what investors, in retrospect, attributed as waste in light of the non-return received as a result of those investments.


Companies thought at the time that this was something that would have continuity, but they made the mistake of discovering that it was temporary. So they cut those investments, and this was reflected in the results, and with them the investors' confidence returned.

It should be noted, however, that the equity component is not yet the lion's share of investments, and most investors are still in bonds. This also contributes to growth stocks, since when there is an influx into bonds, its price drops and the yields from it also fall."

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Sergei Vaschunok, senior analyst at Oppenheimer Investment House (Photo: PR)

So why the big rise in technology stocks?

"Because it feeds investments in technology stocks, which have now begun to look like a more worthwhile alternative to existing bond yields, especially in light of the sharp declines these stocks experienced after the COVID-5 bubble.

The question is why the tech giants receive most of the investor attention, and this is first and foremost technical, since the 100 largest companies traded on NASDAQ account for about half of the Nasdaq 5 index (Microsoft, Apple, Google, Amazon and Nvidia).

Most of the money comes in through ETFs, which is actually an investment in the index, that is, in all the stocks in the sector, and naturally half of the money finds itself in those 10 stocks.

The recovery of Meta's stock may present all that is said in the best possible way, since the company was attributed catastrophic activity due to various projects of its controlling shareholder and the share plummeted to a low, which led it at the beginning of the year to trade at a low multiple of about 100 with a share price of about $2.

It makes no sense that a giant of its kind, which is a platform with about <> billion people worldwide, would trade at a multiplier similar to a small Israeli ed-tech company. But the market is a game of expectations, and if investors expect the company to surprise to the upside, the stock goes up. And vice versa.

At the forefront, the Big Tech lead remains a dark pillar, largely due to strong demand for its iPhones. And the increase in its share price is attributed, among other things, to the company's announcement of its intention to enter new markets, alongside a relatively strong performance in terms of selling ancillary services.

But of all the big tech, we at Oppenheimer Investment House prefer Makerfoot, because it focuses more on organizations with deeper pockets than consumers. And they're also entering the whole field of Chat GPT, which is one of the future things in technology.

Looking ahead, it does not appear that there will be no investments in technology, since it is the one that promotes reducing organizations' expenses, streamlining, and competitive advantages that those who do not adopt them will be left behind.

Alongside all this, it should be remembered that Big Tech also has an Achilles' heel in the form of regulatory spotlights that have begun to shine on companies in light of their size and innovative and intrusive type of activity. The most memorable example is the same Meta we referred to, but all the companies are in the crosshairs of the regulator."

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Source: walla

All business articles on 2023-05-11

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