Bitcoin (BTC) and Ether (ETH)’s painful 60% and 66% price drops, respectively, have been heavily criticized by crypto critics and perhaps rightly so, but there are also plenty of stocks with similar, if not worse, performance.
The sharp volatility seen in crypto prices is partly driven by the bankruptcy of major centralized yield and lending platforms, the bankruptcy of Three Arrows Capital, and a handful of exchanges and mining pools facing liquidity problems.
2022 was certainly not a good year for cryptocurrencies, and even Tesla sold 75% of its Bitcoin holdings in the second quarter at a loss. The quasi-trillion-dollar company still holds a $218 million position, but the news certainly hasn’t helped investors’ perceptions of Bitcoin’s business adoption.
Cryptocurrencies are not the only assets affected by central banks withdrawing stimulus and raising interest rates. A handful of multibillion-dollar companies around the world have also suffered, with losses exceeding 85% in 2022 alone.
Cash-hungry companies saw sharp falls in their share price
Unlike cryptocurrencies, companies, especially those listed on the stock markets, rely on funding – whether the money is used for mergers and acquisitions or for day-to-day operations. That is why the interest rates set by central banks have a dramatic impact on debt-intensive sectors such as energy, car sales and technology.
Saipem (SPM.MI), an Italy-based supplier of oil and gas engineering and exploration for offshore and onshore projects, saw its shares fall 99.4% in 2022. 2021 and it desperately needed cash to stay afloat as the cost of capital increased as interest rates rose.
Uniper (UN01.DE), a German energy company with more than 10,000 employees, suffered severe write-downs after the Nord Stream 2 gas pipeline project was suspended, forcing a bailout of 15 billion euros by July 2022. However, as energy prices continued to rise, Uniper decided it could not fulfill its contracts and was nationalized by the German government in September 2022. The result was a 91.7% decline in the stock year-to-date, compared to a valuation of $14.5 billion.
Cazoo Group Ltd (CZOO) currently has a market cap of $466 million, but the auto retailer was valued at $4.55 billion at the end of 2021, a loss of 90%. Nevertheless, the UK-based company thrived during the restrictions imposed during the lockdowns by offering a way to trade and rent cars online. Similarly, US auto retailer Carvana (CVNA) saw its share price drop 87%.
Biotech companies I-Mab (IMAB) and Kodiak Sciences (KOD) lost 90% of their value by 2022. China-based I-Mab saw its stocks sharply corrected after its partner AbbVie halted its research into cancer drugs. Previously, the biotech company was eligible to receive up to $1.74 billion in success-based payments. North American Kodiak Sciences also suffered a similar fate after its lead drug failed in its Phase 3 clinical trial.
The tech sector relies on growth, which hasn’t happened
Software services was another sector that was hit hard by lower growth and higher hiring costs. For example, China-based 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 bigger deficit in the next three months of $803 million. As a result, the company’s shares traded at 87.6% through September 22.
Other examples in the tech sector are Tuya Inc. (TUYA), a service provider in the field of artificial intelligence and Internet of Things. Shares of the company fell 83.7% in 2022, despite a successful $915 million increase in March as second-quarter revenue fell 27% from the previous year. Tuya has also incurred $187.5 million in losses in the past 12 months.
A handful of other tech companies saw 80% or more extensive corrections in 2022, including Cardlytics (CDLX), Bandwidth (BAND), Matterport (MTTR), and Zhihu (ZH). Each of those examples had a market cap of $1.5 billion or more at the end of 2021, so those losses shouldn’t be dismissed.
Bitcoin’s mediocre performance is unbeatable, especially given that many believed the digital scarcity would be enough to weather a turbulent year. Still, it cannot be said that the stock market has fared much better, adjusted for historical volatility and gains in 2021.
As a result, the volatility and sharp corrections are not exclusive to the sector, and investors cannot simply dismiss digital assets because of a 60% or 70% drop in 2022.
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