Jeff Bezos' Amazon becomes the first public company to lose $1 trillion in market value
Jeff Bezos founded Amazon.com Inc., has achieved the unenviable milestone of being the first public company to lose a trillion dollars in market valuation, Bloomberg has reported.
Incidentally, Amazon was among the first few companies to cross the $1 trillion valuation in the first place, and the recent dip is a sign of the nervousness in the markets about the slowdown in the global economy, led by the U.S. In a bid to keep their costs down, companies like Meta have recently announced layoffs. However, Amazon has so far avoided a reduction in its headcount.
How has Amazon stock fared in 2022?
The COVID-19 pandemic sent a lot of users toward e-commerce, and online retailers like Amazon saw a massive boom in traffic and revenues. As the pandemic receded, the surge slowed down, and revenues dipped.
With the U.S. Federal Reserve looking to tame soaring inflation, interest rates have been hiked, and sales have slowed down even more. Amazon's third-quarter earnings disappointed investors last month, but what has dented investor confidence further is the company's prediction of less than eight percent year-on-year growth for the last quarter of 2022.
While this might not sound bad for other companies, Amazon has been a relentless growth machine, and a sub-eight percent growth is problematic for investors, Gizmodo reported.
Amazon stock has dipped 50 percent in the past six months, and the company's valuation, which was $1.8 trillion in June 2021, is now reduced to $879 billion as of Wednesday.
Not the lone loser
While Amazon might be remembered as the first publicly traded U.S. company to register this feat, it is not the only company facing the heat of the incoming recession. Bill Gates founded Microsoft and might as well have taken this unwanted crown as the company stock has also lost $889 billion in valuation from its peak of $2.49 trillion in November of last year and is now worth $1.67 trillion as of Wednesday.
Apple, valued at over $3 trillion earlier this year, is now worth $2.14 trillion. To summarize, the top five tech companies in the U.S. have lost $4 trillion in valuation this year, which is greater than the combined GDPs of Switzerland, Argentina, and Turkey, Gizmodo said in its report.
Following the earnings of the third quarter, CEO Andy Jassy said that the company would look at balancing its investments in line with its long-term strategy given the prevailing economic environment.
A welcome change in Amazon's approach, compared to other tech companies, seems to be the decision not to let go of its employees. Instead, the company has decided to extend the hiring freeze that it had previously announced.
The dropping valuations of companies and the rapid layoffs they have announced speak much about the global economy that can shift gears quickly.
The system, which uses Tesla technology, went online earlier than originally planned due to predicted energy shortages.