2022 was a bad year for US stocks and with a loss of almost 20%, the S&P 500 had its worst year since 2008. Here are the worst-performing stocks of the year.
At the beginning of 2022, analysts had tepid expectations from markets, and consensus estimates called for low single-digit returns. Morgan Stanley was an outlier and predicted a fall in US stocks.
All said, no one could really have predicted that stocks like Meta Platforms, Netflix, Amazon, Tesla, and PayPal would lose over half of their market caps in 2022. Also, one might have been scoffed at for predicting that energy would be the best sector of the S&P 500 and rise above 50% in the year.
A year later, that’s what exactly happened with US stocks in 2022 and the S&P 500 had its fourth worst year ever. The Nasdaq Composite fell by 33% while Dow Jones Industrial Average outperformed other indices with a loss of only about 9%.
The SPAC Bubble Finally Burst in 2022
Digging deeper, the performance of newly listed stocks, especially those which went public through SPAC reverse mergers was even terrible. The AXS De-SPAC ETF lost almost 74% last year and best captures the turmoil in de-SPACs.
The Renaissance IPO ETF fared somewhat better and lost over 57% last year. While that’s still over twice the losses of the S&P 500, it’s much better than the average performance of de-SPACs.
The SPAC bubble finally burst in 2022 and many of these blank cheque companies liquidated. These include Bill Ackman’s Pershing Square Tontine Holdings and two SPACs from Chamath Palihapitiya who was once touted as the “King of SPACs.”
Many de-SPACs now trade below 20 cents and have lost almost all of their value. The performance of some of the large-cap stocks has been quite bad as well.
List of Worst Performing S&P 500 Stocks in 2022
Generac Holdings was the worst-performing S&P 500 stock of 2022 and lost 71.4% in the year. Match Group, Align Technology, and SVB Financial were the other top S&P 500 losers in that order and respectively lost 68.6%, 67.9%, and 66.1% in the year.
Despite the rebound in the last couple of trading sessions, Tesla was the fifth worst-performing S&P 500 stock with a drawdown of 65%. The stock had its worst-ever year on record, and so did Meta Platforms and PayPal. Both Meta and PayPal were among the top 10 S&P 500 losers.
Incidentally, all FAANG stocks underperformed the S&P in 2022 and only Apple managed to outperform the Nasdaq. It was the rare year when FAANG stocks lost their market leadership as investors shunned growth names.
FAANG Stocks Crashed in 2022
Meanwhile, analysts are bullish on FAANG stocks, especially Amazon. Citi, Bank of America, and JPMorgan, and Goldman Sachs have added Amazon to their top idea list for 2023. We have a guide on how to buy Amazon stock.
Notably, while all the FAANG stocks closed near their 52-week lows, Netflix was an exception and the stock rose almost 80% from its 2022 lows. Evercore ISI is bullish on Netflix stock and has added it to its top ideas for 2023. There is a guide on how beginners can buy Netflix stock.
Apple lost $846 billion in market cap and was the biggest loser in terms of market cap. Amazon was a close second and lost $834 billion in market cap. However, from its 2021 peak, Amazon has lost over $1 trillion. It is the only company to lose over $1 trillion in market cap. Apple too risked falling below the $2 trillion market cap and briefly lost its position as the world’s largest company to Saudi Aramco.
Best Performing Names of 2022 Are Energy Companies
With a gain of 59%, the energy sector was the best-performing sector of the S&P 500 and the only sector that closed in the green. Notably, while crude oil prices slumped from their peaks, energy stocks still raked in decent gains.
Occidental Petroleum was the best-performing S&P 500 stock in 2022 with gains in excess of 110%. Warren Buffett added more Occidental Petroleum shares in the year and Berkshire Hathaway now has the clearance to increase the stake to 50%.
Looking at the top 10 S&P 500 companies, all are energy companies barring First Solar. We have a guide on how beginners can buy energy stocks.
Overall, most analysts got their predictions wrong in 2022. For the next year, analysts have divergent views but most agree that a Fed pivot could spark a rally in the back half.
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