Microsoft lost 29% on the stock market this year. Is it serious doctor ?

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When some companies have had to delay their IPO and others have seen almost all of their capitalization wiped out, one can only imagine that the current context has not spared the biggest. Microsoft, on the stock market, is down 29% in this recession.

Since the end of 2021, its price has been on a downward trend which today brings the company back to its levels of the end of March 2021. Compared to the March 2020 stock market crash with the pandemic, Microsoft is still up by 72% so far.

Behind the recession, investors have done a hell of a cleanup of companies on the stock market whose model was still too feverish to weather a crisis. Many had to lay off and urgently review their business model. At Microsoft, with a capitalization of 1,700 billion dollars, the crisis is still far away.

That said, it was necessary to make layoffs and refocus priority projects. About a hundred employees (1% of its workforce of 180,000 individuals) have therefore left the company, particularly in the gaming section and in the Missions and Strategic Technologies department.

Microsoft’s difficulties in the stock market

The specialists of Motley Fool listed in an article that Microsoft was suffering from the fall in PC sales around the world, and from the general tendency of investors to abandon technology stocks in favor of other areas, such as energy. However, Microsoft has just renewed its products.

They added, however, that Microsoft was one of those rare stocks to remain relevant to keep in its portfolio, explaining why the company remains one of the most stable Big Techs. Over the past five years, the stock has risen by 500%, to rank third among the largest market capitalizations in the world, far ahead of Google and Amazon.

Several explanations for its fall on the stock market:

  • In the third quarter of 2022, PC shipments fell by 19.5%
  • PCs make up 30% of Microsoft’s revenue
  • Nvidia and AMD shares fall nearly 60%
  • Significant competition in smart cloud and productivity software

In its IT branch, Microsoft can nevertheless count on consoles (Xbox), whose sales increased by 16% during the year – also including the activity of Xbox Game Pass. A means of limiting the fall. In the near future, Microsoft also wants to open a mobile game store, a logical continuation of the acquisition of Activision Blizzard for 69 billion dollars at the start of the year.

Same thing for the smart cloud. With Microsoft Azure, the firm is well positioned to take advantage of a market forecast to grow by 15.7% per year until 2030. From 2021 to 2022, the activity has already seen its revenues grow by 25%. Enough to position Microsoft well for the future.

The third branch where Microsoft records significant revenue concerns productivity and business solutions, such as the Office suite (which has just changed its name) and LinkedIn. These various products account for 31.9% of Microsoft’s revenue in 2022, up 18% year-over-year.

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