The Sunday Brief

Connecting technology, telecommunications, and the internet

Value Creation – Long-term charts, Fab Five vs. Telco Top Five (May 27)

by | May 28, 2022 | TSB

Hope everyone is having a safe Memorial Day weekend, a time to reflect on freedom and sacrifice. Thanks to each service member who has served our great country.

Fab Five stocks largely recovered over the last two weeks (+$95 billion), with Amazon growing $91 billion over that period. In total, the group has still given up close to $2.3 trillion in equity market capitalization in 2022, nearly the amount that it gained in 2021 ($2.5 trillion). Cash balances are still high at each of the Fab Five, and net debt for each stock continues to be negative. Facebook remains the biggest 2022 loser in the group – this was exacerbated by Snap earnings this week which drove an additional $10 billion in equity losses.

While we are not stock price predictors, it’s important to note that June/July tend to be the low water mark for the Fab Five (at least it was in 2018, 2019, and 2021). After second quarter earnings emerge, the focus usually turns toward next year’s earnings, and, given the growth trajectory of each stock, multiples tend to grow.

The Telco Top Five continued to dig out from early year equity losses, adding $52 billion over the last fortnight. As we have stated in many Briefs, there is a bifurcation between the traditional telcos and cable (note that the AT&T equity change in 2022 is not adjusted for the WarnerMedia spin – on an adjusted basis, AT&T would be positive for the year). Verizon is slowly recapturing value, and T-Mobile is bumping up against all-time highs hit in July 2021. Comcast and Charter are definitely bouncing off of their April and early May lows.

More in the attached spreadsheet. Welcome any comments and questions to jim@pattersonadvice.com. Have a great remainder of the long weekend!

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