The Sunday Brief

Connecting technology, telecommunications, and the internet

Value Creation – Long-term charts, Fab Five vs. Telco Top Five (June 10)

by | Jun 12, 2022 | TSB

Note: Through July, we will be reporting Amazon on a pre-split basis. The accurate share price and number of shares will be correctly reflected after Amazon reports earnings at the end of July.

This was a particularly tough couple of weeks for the Fab Five, losing $484 million in market capitalization. Each of the Fab Five lost value, with Apple down $204 billion and Microsoft down $152 billion. Cumulative year-to-date losses now exceed 2021’s gains ($2.75 trillion vs. 2021’s total year gains of $2.45 trillion). With earnings outlooks impacted by uncertain consumer spending, markets are shaken. Energy producers are replacing energy consumers as the most attractive asset category.

The Telco Top Five have not experienced the volatility of their Fab Five counterparts, but each of the group also managed to lose value over the last fortnight. Losses for the Telco Top Five peaked at the end of April ($142 billion on April 29) and now stand at $85 billion. This excludes the value attributed to AT&T’s WarnerMedia spin (~$40 billion). T-Mobile and a spin-adjusted AT&T have actually added value in 2022. Lower losses for 2022 is definitely not enough to offset trillions of dollars of value creation gap over the last decade, but is an indicator of the relative attractiveness of a utility-oriented monthly recurring model.

More to come in next week’s Brief. Please address any questions to jim@pattersonadvice.com. Have a terrific week!

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