Amazon’s market value recently dropped by $1 trillion. As a result, the eCommerce giant made history as the first publicly traded company to record such a massive loss.
To put that into perspective, it is like losing market value equivalent to Alphabet’s net worth, Google’s parent company. Its current value is roughly $1.13 trillion.
The world’s largest eCommerce firm closed 4.3% lower at $86.14 on Wednesday. As a result, its stock lost roughly 48% of its value in 2022 alone.
Other tech firms are losing market value.
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In July 2021, Amazon’s market capitalization was $1.9 trillion. Now, it is down to nearly $879 billion.
In response, Amazon CEO Andy Jassy launched cost-cutting measures for the company. These include suspending or removing unprofitable projects and reassigning workers.
The company would also look into its tech products like the Alexa smart speakers. Moreover, Amazon CFO Brian Olsavsky explained the factors behind Amazon’s market value crash to Reuters.
“We are seeing signs all around that, again, people’s budgets are tight, inflation is still high, energy costs are an additional layer on top of that caused by other issues.”
The chief financial officer added, “We are preparing for what could be a slower growth period, like most companies.
Amazon’s market value is not the only one experiencing the pinch. The top five US tech firms in revenue have lost $4 trillion in market value in 2022.
Microsoft’s market value went from $2.5 trillion to roughly $1.78 trillion at the time of writing. Meanwhile, Meta’s market value was over $1 trillion in August 2021.
Now, it sits at roughly $285 billion. Moreover, CEO Elon Musk removed remote work at Twitter due to dwindling ad revenue.
The Center for Financial Research and Analysis (CFRA) Research kept its “Buy” recommendation on Amazon stock on October 28, 2022.
However, the firm lowered its 12-month target from $170 to $152. CFRA analysts said: “High consumer inflation and weak sentiment are negatively impacting holiday e-commerce demand….”
“…and AMZN’s faster-growing and highly profitable cloud business is finally experiencing a slowdown as companies pull back on IT spend amid macro uncertainty.”
Conclusion
These uncertain times are producing a unique environment for investors. People are losing their confidence in traditionally safe investments like stocks.
They are selling tech stocks en masse, causing a historic drop in Amazon’s market value. On the other hand, more people are choosing cryptocurrencies instead.
It is easier to adjust to these trends if you learn about them as soon as possible. Fortunately, you can keep yourself informed by reading more Inquirer Tech articles.