When Amazon (Nasdaq: AMZN) reported earnings last Thursday evening, the company disappointed investors when its revenue fell short of analysts’ estimates and the company issued a fourth-quarter outlook that was below analysts’ expectations. Since the earnings report the stock is down almost 16% as I write this.
The stock dropped 7.8% on Friday, it dropped another 6.3% on Monday, and it is down another 2.45% in early Tuesday trading.
According to Bloomberg, the drops on Friday and Monday caused Jeff Bezos, Amazon’s CEO and the richest man in the world, to lost $19.2 billion. That drop in net worth set a new record for the biggest drop in net worth for any two-day period. The previous mark was set in July when Facebook (Nasdaq: FB) founder Mark Zuckerberg lost $16.5 billion. That drop also came after a disappointing earnings report.
Bezos is likely still the richest man in the world because he had a $22 billion lead over Bill Gates, but that lead has certainly shrunk in the past week.
Look at it this way, if Jeff Bezos had simply handed $20 billion to someone with a net worth of zero, that recipient would now be one of the 60 richest people in the world. This would place that person ahead of such notable people as Elon Musk, Carl Icahn, and Rupert Murdoch.
Amazon wasn’t the only FANG stock that disappointed investors. Google parent Alphabet (Nasdaq: GOOGL) came up short of analysts’ estimates on its revenue as well. It has fared much better than Amazon, but it has still lost 5.5%.
Fellow FANG member Netflix (NASDAQ: NFLX) reported back on October 16 and it surprised investors with a better than expected earnings report. The stock jumped initially, but has since dropped 21.9%.
Facebook is the last FANG member to report earnings for the quarter and it is scheduled to report later today. As I mentioned earlier, Facebook disappointed with its second-quarter earnings report and the stock is down 34.7% since that earnings report in July.
According to Reuters, the declines in the FANG stocks on Friday and Monday alone erased $200 billion in market cap.
I know I have issued a number of cautious articles on Bull Market Rodeo, but this is really scary stuff and it is reminding me more and more of the start of the bear market in 2000. I wrote about Facebook and Netflix both disappointing in July, and how the FANG stocks were like the old Four Horsemen of the Nasdaq (Cisco, Dell, Intel, and Microsoft).
I went back and looked at the performances of three of the Four Horsemen in the second half of 2000 and what I found was that the declines were much steeper. I looked at Cisco, Intel, and Microsoft from the end of June through the end of October 2000. Dell was taken private so I don’t have access to their old chart. Of the other three, all of them were down sharply. Cisco was down over 21% in mid-October. Microsoft was down over 37% in the middle of October and Intel was down 47%.
Looking at the FANG stocks since the end of June, the declines haven’t been nearly as steep. Facebook and Netflix are down the most and they were the first to issue disappointing earnings reports in July. Both are down approximately 27%. Amazon and Google just recently issued their disappointing reports and they are both down less than 10% at this point.
If the fall in the FANG stocks does turn out to be the catalyst for the next bear market, we seem to be getting a later start in terms of the calendar. The FANG stocks would have to drop further in the next month or so to match the declines we saw from the Four Horsemen back in 2000, so we will have to wait and see.
For now, we can all just pity Jeff Bezos and his extreme loss in net worth. The poor guy is only worth around $90 billion now.