The Sunday Brief

Connecting technology, telecommunications, and the internet

Value Creation – Long-term charts, Fab Five vs. Telco Top Five (October 21)

by | Oct 22, 2022 | TSB

Most of the Fab Five and Telco Top Five had solid capitalization gains this week. Apple was up $143 billion for the week, Amazon was up $127 billion, and AT&T (earnings announced last Thursday) posted a solid $15 billion increase. Overall, the Fab Five were up $435 billion for the week ($238 billion over the 2-week period) and the Telco Top Five were up $20 billion and $16 billion for the same timeframes.

Not everyone, however, enjoyed a bounce. Facebook/Meta was impacted by Snap’s earnings (which sent Meta down 4.4% at the market open on Friday. In comparison, Snap lost 28+% of its value on Friday), and Verizon was impacted by their own earnings (down 4.5% after announcing on Friday). Verizon’s stock hit an intra-day low of $34.57 on Friday which represents a 37% drop from their highs just six months ago. Three years ago (mid-October 2019), the stock was above $60.

We will have more on earnings in the October 30th Halloween Brief, but want to leave three things to think about: 1) Companies that have pensions (and specifically defined benefit plans) will have to account for recent market capitalization changes in their earnings. T-Mobile does not have the same exposure to that risk as Charter, Verizon or AT&T do, and 2) The dollar will weaken eventually and the ramifications of that to US consumers will lead to even higher prices (today, it costs fewer dollars to purchase a German or Japanese automobile), and 3) Verizon had an additional “below the line” earnings impact due to some variable interest rate hedging – understanding the positive impact of those hedges to previous quarters’ earnings would be useful to know.

More in next week’s Brief after everyone has announced earnings. Full spreadsheet is below. Look for the iPhone 14 charts prior to the Chiefs/ 49ers game tomorrow (3:20 p.m. CT kickoff).

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