Key takeaways
- Tesla had a profitable year, but the stock price has been hurt by CEO Elon Musk’s purchase of Twitter.
- Meta stock has been on a steep decline as revenue has fallen and spending on developing the metaverse has increased.
- Disney had a shakeup with its CEO in November, and the entertainment giant is trying to maximize the value of its streaming service.
It is always good to look back at the most actively traded stocks when the year comes to a close. These aren't stocks that popped one day based on a buyout or plummeted on a major earnings miss. These are the stocks that were at the top of the most actively traded lists on most days. Here is a rundown of the top names, what happened to them in 2022, and their outlook as we head into 2023.
Tesla
Tesla's stock had a wild ride in 2022, with swings up and down. It is currently down almost 50% YTD. For comparison, the Nasdaq is down 29% during the same period. Tesla's CEO, Elon Musk, is considered the source of the stock price swings as he sold off a large portion of his Tesla stock to help pay for the purchase of Twitter.
As a company, Tesla had a profitable year in sales and delivered over 900,000 vehicles to customers worldwide during the first three quarters, however it has plans to cut production in 2023. Tesla delivered its first set of Semi trucks to Pepsi in the first week of December 2022, helping boost the stock.
The outlook for Tesla in 2023 is mixed, but the company is not going anywhere. Its stock may take a while to settle into a predictable price range, but Tesla has the potential to be a reliable performer in the future.
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Apple
Apple has seen its share of challenges in 2022, including supply and labor problems in China and a rollback of additional iPhone 14 production plans. However, Apple's 20% loss in stock price has more to do with the overall sell-off of tech stocks than internal problems with the tech giant. The company has done well in terms of maintaining a large cash balance, continuing demand for its iPhone and iMacs, and increasing its service revenues.
Apple's response to its production issues in China has been to move the manufacture of the iPhone to other countries. This diversification will help the company overcome supply chain disruptions in the future.
The company is also investing heavily in augmented and virtual reality technologies, but it remains to be seen if Apple can turn a niche product into an industry-dominating one, as it has in other areas of tech. Ultimately, Apple can weather a product flop easily as its core products are always in demand, and it’s stock is widely considered good to hold for the long term.
Microsoft
Microsoft saw its stock price battered heavily during 2022, with values ranging between $344 per share on the top end and $213 on the bottom. It has lost 28% in value year to date, but its loss in value has more to do with a widespread tech sell-off than performance problems. Microsoft's cloud computing division, Azure, continues to perform well, maintaining its operating system share of 76% of all computers worldwide. It also holds a large amount of cash on hand.
The company is looking at making significant expansions in 2023 with its acquisition of digital advertising company Xandr, a partnership with Netflix
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Nvidia
Nvidia's graphics processing units (GPUs) were in high demand until early 2022. Its stock price has seen a consistent downward trend as demand for its GPUs has slacked off, with the bursting of the cryptocurrency bubble and inflation eating away at consumers' ability to pay high prices for Nvidia's products. Inventories of Nvidia's products are increasing while sales are falling.
It's worth noting that the PC market is cyclical, and it takes time for graphics technology to advance to a point where upgrading a GPU makes sense. Nvidia is used to weathering these cycles and is looking into other areas, such as virtual reality, for expansion. Its stock price is currently higher than it was at the end of 2017, demonstrating that the company has good governance and performs well over the long term.
Exxon
Exxon stock started 2022 trading at $68 per share and has reached $103.54 in the first week of December. The stock has surged mostly upward for the year due to spikes in energy prices, generating large profits for the company. It plans to take those profits and spend between $23 billion to $25 billion on capital investments. Exxon also plans to invest $17 billion into lower emissions projects to reduce greenhouse gasses, carbon capture and storage, and alternative fuels.
The energy generation industry is changing, and Exxon plans to be at the forefront of that change. Its stock price is tied to the profitability of fossil fuels for the near future, but it's wielding its size and strength to make alternative energies and lower-emission products into a profit center. Analysts forecast the stock to reach a median $120 per share in 2023, but changes in commodity prices can affect that outlook. Energy stocks tend to be recession proof and are suitable for a long-term hold in the stock portfolio, and Exxon fits the profile nicely.
Netflix
On the whole, 2022 was a rough year for Netflix's stock price as viewers spent less time at home, other streaming platforms continue to eat up market share, and increased prices drove users away. The problems for Netflix began when the company reported a loss of 200,000 subscribers in the first quarter of 2022 — the first loss of subscribers in a decade. Even though this was a relatively small loss, it spooked investors into thinking that Netflix would struggle to maintain a profit.
These and other fears were short-lived as Netflix introduced ad-supported membership options to the platform in 12 countries. It's also changing its focus from using subscriber count as a metric for growth and switching to revenue per user instead. User revenue delivers a more accurate picture of future growth, and Netflix expects to add 4.5 million new users in the fourth quarter of 2022. Netflix shows that it's not willing to go down without a fight and that it's nimble enough to find ways to increase revenue and keep growing for the long term. As the company keeps maturing, so will its stock and long-term value.
Amazon
Amazon's business units have performed well in 2022, but its stock price has not. This is partly due to the weak market in general. As interest rates rise to fight inflation, many investors are fleeing high-growth tech stocks for safer options. Another issue is that during its third quarter conference call, Amazon stated that it expected a weak holiday outlook.
For the year, Amazon stock is down close to 47%, to $90.55 as of this writing. The outlook for 2023 is mixed, with online sales expected to be soft with the threat of a recession pending. The key for Amazon is its Web Services division, which is still growing, but at a slower pace than it had been. If this division can get back on track and the potential recession is short and mild, this stock could break out by year end.
Meta
Regarding stock performance, Meta, the parent of Facebook, Instagram, and WhatsApp, has had a bearish year. After starting the year trading at $338.54, the stock is down 66% to $114.71. The low for the year was $88.91 in early November.
There are a few reasons for the stock’s loss in value, but the two biggest are the weakness in ad revenue and the company’s excessive spending on developing the metaverse. Ad revenue is down due to a weak economy and the expectation that the U.S. will enter into a recession in 2023. Additionally, Meta is struggling with the privacy controls Apple has implemented, which limits the tracking of users' personal data across websites.
There is no end in sight regarding CEO Mark Zuckerberg’s massive spending on building up the metaverse. He is convinced this is the next big thing and is putting all of Meta's eggs into that basket. In the first nine months of 2022, the Reality Labs division lost $9.4 billion. Through the first nine months of 2021, the division lost $6.8 billion. At the company's most recent earnings call, Zuckerberg stated that the losses would increase substantially in the coming year. To offset some of this spending, the company announced it would be laying off workers.
For 2023, the outlook is still cloudy for the tech giant. With ad revenue expected to be soft and more spending on the metaverse, the odds of a breakout for this stock are slim.
Disney
Disney has been on a roller coaster ride in 2022. Early in the year, investors were still excited about the growth of the company's streaming service and upcoming movie releases. But towards the end of the year, everything changed.
Disney reported fourth quarter earnings that missed estimates. Additionally, the company warned of slower streaming growth in the beginning of 2023, which is an issue since this segment is not profitable yet. In a surprise move, CEO Bob Chapek was ousted and former Disney CEO Bob Iger returned.
Iger plans to not only turn the streaming service into a cash flow positive but also improve upon the other segments of the company. His tenure this time around is expected to last only two years, and he will have a major role in finding his successor.
For the year, Disney stock is down close to 40%. This could be a stock worth taking a position in at this price level as the company improves efficiency heading into 2023.
Alphabet
Alphabet, much like Meta, relies heavily on ad revenue to fund other business lines until they can become profitable. The problem with this is that revenue decreases in a slowing economy due to weak advertising spending. This is what happened to Alphabet in 2022.
When the company reported third quarter results, the decline in ad revenue shocked investors. Other unwelcome news is that Google Cloud and Other Bets, two other business lines, also increased their losses.
The stock is now down 35% on the year, which is not as bad as many other stocks on this list. However, given the weak outlook for the economy heading into 2023, there is no reason to believe the stock will recover any meaningful amount in the short term.
The bottom line
The most actively traded stocks in 2022 are likely going to be highly traded in 2023. Even the underperforming stocks will most likely end up near the top of the list again in 2023. This is because they are large-cap stocks with proven management teams who have performed well over time. With a cheap stock price, investors will be open to building positions, and hoping the price will rebound in the near term.
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