Well, the world didn’t end in July, and, in fact, the markets were unusually bullish. The Fab Five gained $920+ billion this month, with 2022 YTD losses ending July at a mere $1.822 trillion. One would have to go back to April to see losses this low. Every one of the Fab Five except Meta (who lost value) had $100 billion gains this week. A post-earnings spike is not uncommon, particularly after the second quarter, so we are not surprised and do not believe that there’s a massive rebound underway.
The Telco Top Five had an absolutely crazy week (really two weeks). The result is actually the inverse of the Fab Five: Four of the Telco Top Five reached (or nearly reached) their largest loss level for 2022 in the last two weeks (again, coinciding with earnings). Comcast, AT&T, and Verizon experienced some of (if not the) largest one-day stock price drops in their respective business histories after reporting 2Q earnings. Meanwhile, T-Mobile, the main topic of next week’s Brief, rose to its largest gain for the year after reporting earnings. We like to use the phrase from the Sesame Street jingle “One of these things is not like the other…” because it’s true. More on why in next week’s post.
Lastly, as we teased in the LinkedIn post yesterday, a quick look at the net debt for the Fab Five (we are showing 2Q 2021 vs. beginning of 2022 vs. 2Q 2022). Cash piles are being depleted (why not, with 9+% finished goods and even higher intermediate inflation levels?) and debt reduction is a lower priority. The advantage of the Silicon Valley/ Big Tech negative net debt mindset is that it makes rainy days (like 2Q 2022) easier to manage. Sure, hiring will slow down, but no massive layoffs or other apocalyptic 1980s-esque actions. Treasury capital allocation purists be damned – that cash pile really comes in handy when times get tough.
More next week. Spreadsheet below. Second tab is the cash balance schedule. Welcome comments and questions.