Bitcoins (BTC) and Ether’s (ETH) agonizing 60% and 66% respective price declines are attracting a lot of criticism from crypto critics, and perhaps deservedly so, but there are also plenty of stocks with similar, if not worse, performances.
The sharp volatility in cryptocurrency prices is partly due to the insolvency of major centralized income and credit platforms, the bankruptcy of Three Arrows Capital and a handful of exchanges and mining funds facing liquidity problems.
For cryptocurrencies, 2022 was definitely not a good year and even Tesla sold 75% of its bitcoins in the 2nd quarter with a loss. The quasi-billion dollar company still holds a $218 million position, but the news certainly didn’t help investors’ perception of corporate adoption of Bitcoin.
Cryptocurrencies are not the only asset that central banks are having an impact on by withdrawing stimulus measures and raising interest rates. A handful of multi-billion dollar companies around the world have also suffered, with losses expected to exceed 85% in 2022 alone.
Cash-hungry companies saw their share prices plummet
Unlike cryptocurrencies, companies, especially those listed on stock markets, rely on funding – whether cash is used for mergers and acquisitions or day-to-day operations. This is why interest rates set by central banks dramatically affect debt-intensive sectors such as energy, auto sales and technology.
Saipem (SPM.MI), an Italy-based provider of oil and gas engineering and exploration services for offshore and onshore projects, has seen shares fall 99.4% in 2022. The company suffered severe losses of more than one-third of its 2021 equity and was in desperate need of cash to stay afloat as capital costs rose with rising interest rates.
Uniper ( UN01.DE ), a German energy company with more than 10,000 employees, faced severe damage after its Nord Stream 2 gas pipeline project was suspended, forcing a 15 billion euro bailout in July 2022. However, as energy prices continued to rise, Uniper was unable to meet its contracts and was nationalized by the German government in September 2022. The result was 91.7% year-to-date stock take-up, down from a $14.5 billion valuation.
Cazoo Group Ltd (CZOO) currently holds a market cap of $466 million, but the car retailer was valued at $4.55 billion by the end of 2021, representing a 90% loss. However, the UK-based company thrived during the restrictions imposed during the lockdown by offering a way to trade and rent cars online. Similarly, US car retailer Carvana ( CVNA ) saw its share price drop 87%.
Biotech companies I-Mab ( IMAB ) and Kodiak Sciences ( KOD ) have lost 90% of their value in 2022. China’s I-Mab saw its shares correct sharply after its partner AbbVie halted its study of the cancer drug. Previously, the biotech company was eligible for up to $1.74 billion in performance-based payments. North America’s Kodiak Sciences also faced a similar fate after its lead drug failed in a phase 3 clinical trial.
The tech sector relies on growth, which hasn’t happened
Software services was another sector deeply affected by lower growth and increased hiring costs. For example, China’s Kingsoft Cloud Holdings (KC), a cloud services provider, posted a net loss of $533 million in the first quarter of 2022, followed by an even larger deficit of $803 million over the next three months. As a result, its shares traded up 87.6% year-to-date through September 22.
Other examples in the technology sector include Tuya Inc. (TUYA), an artificial intelligence and IoT service provider. The company’s stock has plunged 83.7% in 2022 despite a successful $915 million raise in March as Q2 revenue fell 27% from a year earlier. Tuya also accumulated losses of $187.5 million over the past 12 months.
A handful of other tech companies saw 80% or more large corrections in 2022, including Cardlytics ( CDLX ), Bandwidth ( BAND ), Matterport ( MTTR ), and Zhihu ( ZH ). Each of these examples had a market cap of $1.5 billion or higher by the end of 2021, so these losses cannot be ruled out.
Bitcoin’s lackluster performance isn’t shocking, especially considering that many thought its digital scarcity would be enough to see it through a turbulent year. Still, it can’t be said that the stock market has fared much better adjusting to historical volatility and gains in 2021.
As a result, volatility and sharp corrections are not unique to this sector, and investors cannot simply dismiss digital assets for a 60% or 70% drop in 2022.
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