The agonizing 60% and 66% drops in the price of Bitcoin (BTC) and Ether (ETH) respectively draw a lot of criticism from crypto critics, and perhaps deservedly so, but there are also plenty of stocks with similar, if not worse, performance.
The sharp volatility seen in cryptocurrency prices is partly caused by the insolvency of major centralized income and lending platforms, the bankruptcy of Three Arrows Capital, and several exchanges and mining pools facing liquidity issues.
For cryptocurrencies, 2022 has definitely not been a good year, 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 didn’t help investors take in the corporate adoption of Bitcoin.
Cryptocurrencies are not the only assets that have been affected by the removal of stimulus measures by central banks and higher interest rates. Several multi-billion dollar companies around the world have also been hit, with losses exceeding 85% in 2022 alone.
Companies in need of cash see their share prices plummet
Unlike cryptocurrencies, companies, especially those listed on stock markets, rely on funding, whether the funds are used for M&A or day-to-day operations. This is why interest rates set by central banks have a strong impact on long-term sectors such as energy, auto sales and technology.
Shares of Saipem (SPM.MI), an Italian oil and gas engineering and exploration services provider for offshore and onshore projects, are down 99.4% in 2022. The company suffered serious losses, more than one-third of its capital in 2021, and was desperate for cash to stay afloat as capital expenditures soared as interest rates rose.
Uniper (UN01.DE), a German energy company with more than 10,000 employees, faced severe losses after its Nord Stream 2 gas pipeline project was put on hold, forcing it to fail to meet its targets in July 2022. contracts and was nationalized by the German government in September 2022. As a result, the stock is down 91.7% year-to-date from a $14.5 billion valuation.
Cazoo Group Ltd (CZOO) currently has a market capitalization of $466 million, but by the end of 2021, the car retailer was valued at $4.55 billion, a 90% loss. However, the United Kingdom-based company thrived during lockdown restrictions by offering a way to trade and rent cars online. Similarly, US auto retailer Carvana (CVNA) was down 87%.
Biotech companies I-Mab (IMAB) and Kodiak Sciences (KOD) lost 90% of their value in 2022. Shares of Chinese company I-Mab soared after partner AbbVie suspended trials of a cancer drug. Previously, the biotech company was eligible for up to $1.74 billion in payouts based on success. North American company Kodiak Sciences also suffered the same fate after its lead drug failed in Phase 3 clinical trials.
The tech sector is counting on growth that didn’t happen
Software services was another sector hard hit by lower growth and higher recruitment costs. For example, Chinese cloud service provider Kingsoft Cloud Holdings (KC) posted a net loss of $533M in the first quarter of 2022, followed by an even bigger deficit over the next three months of $803M. Consequently, its shares fell 87.6% year-to-date through September 22.
Other examples in the technology sector include Tuya Inc. (TUYA), an AI and IoT service provider. The company’s shares are down 83.7% in 2022, despite successfully raising $915 million in March, as second-quarter revenue was down 27% year-over-year. Tuya has also accumulated $187.5 million in losses over the past 12 months.
Several other tech companies experienced major fixes of 80% or more in 2022, including Cardlytics (CDLX), Bandwidth (BAND), Matterport (MTTR), and Zhihu (ZH). By the end of 2021, each of these examples had a market capitalization of $1.5 billion or more, so these losses cannot be discounted.
Nothing glosses over Bitcoin’s weak performance, especially when you consider that many thought the digital data scarcity would be enough to weather a turbulent year. However, it cannot be said that the stock market has improved much by adjusting to historical volatility and growth in 2021.
Therefore, volatility and sharp corrections are not unique to the sector, and investors cannot simply abandon digital assets due to a 60% or 70% drop in 2022.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of . Every investment and trading move involves risk. You should do your own research when making a decision.