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Premarket Stocks: Wall Street's Biggest Winners and Losers in 2022

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A version of this story first appeared in the CNN Business newsletter Before the Bell. Not a subscriber? you can apply right here. You can listen to an audio version of the bulletin by clicking on the same link.


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CNN

This has not been a good year for the stock market. The S&P 500 is down nearly 20%, and with two trading sessions left in the year, investors’ hopes for a miracle recovery have been dashed.

But even when the broader market is losing, there are still winners – and there were quite a few of them this year – most notably in energy, which was the best performing sector of 2022.

Here are the year’s big winners and losers.

The winners: The story of 2022 has been energy.

The brutally high prices of oil and gas have been the talk of the town this year and one of the biggest contributing factors to skyrocketing inflation. That’s bad news for drivers, but it turned out to be great news for the energy sector, as oil prices and energy inventories are closely intertwined.

So far, the energy sector has returned more than 60% this year, significantly outperforming all other sectors in the S&P 500. No other sector has gained even 5% year-to-date.

Occidental Petroleum was the biggest gainer of the year in the S&P 500, rising 122% year-to-date.

Constellation Energy (CEGDX) is in second place up 109% and Hess (HES) comes in third with a gain of 94%. Rounding out the top ten are Marathon Petroleum (MPC), Exxon (XOM), Schlumberger (SLB), APA (APA), First Solar (FSLR), Halliburton (HAL) and Marathon oil (MRO), all between around 70 and 80 % this year.

Gas and oil prices have fallen in recent weeks, but are still higher than in recent years. This has contributed to record profits at major energy companies. Net income for global oil and gas producers is expected to double in 2022 to a record $4 trillion, according to the International Energy Agency.

In the third quarter, 81% of all energy companies in the S&P 500 reported earnings above estimates, the highest of any industry, according to Factset data. The energy sector posted the highest year-over-year earnings growth of all 11 sectors, at 137.3%.

The losers: This was the year there was no free lunch in Silicon Valley.

Big Tech reached new heights over the last decade as companies enjoyed a low interest rate, low inflation environment. This is no longer the case, technology and communication stock prices clearly reflect this.

Energy technology solutions company Generac Holdings (GNRC) is the worst-performing stock in the S&P 500 so far this year, down about 74%. In second place is dating app company Match Group (MTCH), which is down 70%. Elon Musk’s Tesla (TSLA) is also down about 70%, making the automotive tech company the third-worst performer this year. Meta, Facebook’s parent company, also appears in the bottom 10 stocks – down 65%.

That’s a big shakeup, earlier this year Tesla was the fifth most valuable company in the S&P 500 and Meta was sixth.

Big tech had a nightmare year in 2022 – collectively losing nearly $4 trillion in market cap in 2022. That’s a lot when you consider that the 10 worst performing stocks in the S&P 500 wiped out a market cap of around $1 .6 trillion.

Even Apple, generally considered more resilient than other tech companies, is down 31%, more than the overall market in 2022.

Wall Street is hoping for a tech recovery next year, but with more interest rate hikes on the way and a possible recession, investors may be left waiting.

Sam Bankman-Fried bought a nearly 7.6% stake in Robinhood (HOOD) earlier this year, funded with half a billion dollars borrowed from his hedge fund. The same one that prosecutors say is illegally funneling funds from customers of its affiliated platform, FTX.

In a deposition released Tuesday, Bankman-Fried said he and FTX co-founder Gary Wang borrowed more than $546 million from hedge fund Alameda Research. He then used the money to buy a large stake in Robinhood, reports my colleague Allison Morrow.

Why it matters: Bankman-Fried’s stake in Robinhood is now at the center of a separate multinational legal battle over assets associated with FTX’s bankrupt crypto empire.

Four separate entities claimed approximately 56 million shares, worth around $450 million. SBF really wants to keep these shares – he is relying on them as a source of payment for legal expenses, according to FTX.

It’s unclear from court filings whether the $546 million used to buy the stake included funds that prosecutors allege were stolen from customer deposits at FTX.

Meanwhile, the recent crypto winter has been bad news for Robinhood. The company laid off 23% of its staff in August after cutting 9% of its staff in April. Shares in the online brokerage are down nearly 60% year-to-date.

Southwest (LUV) is in the midst of a service collapse – canceling thousands of flights during the busiest days of the year and leaving a trail of angry investors, government officials, employees and tens of thousands of stranded customers in its wake.

The company’s shares fell about 5% on Wednesday after falling 6% on Tuesday – their biggest drop in five months. The plane is currently down about 27% this year as investors fear the worst for the fate of the company, which simply cannot get itself back on its feet.

So what happened? Experts, employees and even the CEO admit that the Southwest mess has been brewing for decades, reports my colleague Alicia Wallace.

“We’ve had these issues for the last 20 months,” Captain Casey Murray, president of the Southwest Airlines Pilots Association, told CNN this week. “We’ve seen these types of meltdowns occur much more regularly and it really has to do with outdated processes and outdated IT.”

Murray noted that Southwest’s old scheduling system hasn’t changed much since the 1990s. Chief Operating Officer Andrew Watterson told employees this week that the outdated scheduling system was the main culprit for the outage.

Southwest’s “peer-to-peer” model didn’t help either. The operational approach involves planes flying consecutive routes, picking up crews at these locations, and relying on short turnaround times.

“When they have cancellations in an area, it really impacts because they don’t necessarily have their crews and their pilots in the right positions,” said Jeff Windau, senior equity research analyst at Edward Jones. “They just develop from city to city, and when that stops, it’s very difficult to get operations flowing smoothly again.”

Southwest has acknowledged many of the concerns raised by Murray and others.

“Part of what we’re suffering from is a lack of tools,” Southwest CEO Bob Jordan told employees in a memo obtained by CNN. “We talk a lot about modernizing the operation and the need to do that.”

What is the next: The Department of Transportation said it was investigating Southwest’s wave of cancellations and customer service delays. President Joe Biden said his government “is working to ensure that airlines are held accountable”.

Democratic Senators Ed Markey of Massachusetts and Richard Blumenthal of Connecticut issued a new letter Tuesday asking Southwest to pay for what they say are avoidable vacation cancellations.

“Southwest is planning to issue a $428 million dividend next year – the company can afford to do good for the consumers it has wronged,” they wrote. “Southwest must first focus on its customers stranded in airports and stuck on endless waits.”

Other airlines, meanwhile, are doing what they can to compensate. United and American Airlines (AAL) said they would place price caps on travel to and from select cities designed to help the airline’s customers get home on a budget.

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