Amazon has made history as the first public company ever to lose $1 trillion in market value, as the tech selloff worsens

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Amazon has made history as the first public company ever to lose $1 trillion in market value, as the tech sell-off worsens

markets.businessinsider.com

Amazon has made history as the first public company ever to lose $1 trillion in market value, as the tech selloff worsens

Amazon's share price closed 4.3% lower at $86.14 on Wednesday. The stock has lost around 48% of its value this year.
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htan@insider.com (Huileng Tan)
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Amazon's share price has almost halved so far this year.
Mike Segar/Reuters

Amazon has become the first public company ever to lose $1 trillion in market value, per Bloomberg.
Its share price closed 4.3% lower at $86.14 on Wednesday, taking its market value down to $879 billion.
Amazon's market value was nearly $1.9 trillion in July 2021.
Amazon has become the first public company ever to lose $1 trillion in market value amid a tech stock rout, according to Bloomberg. That's almost like losing Google parent Alphabet's worth of market value, which is now around $1.13 trillion.

The world's largest online retailer's share price closed 4.3% lower at $86.14 on Wednesday, taking its market capitalization to about $879 billion.

The stock has lost around 48% of its value this year alone, and is a far cry from July 2021 when the company's market cap almost touched $1.9 trillion, per Bloomberg.

Amazon's market value fell below the $1 trillion mark on November 1, days after the company posted mixed third-quarter earnings and projected the company's slowest fourth-quarter growth ever.

It's not just Amazon that's bleeding money, the top five US tech companies by revenue have already lost nearly $4 trillion in market value so far this year, thanks to rising inflation and macroeconomic headwinds, per Bloomberg.

"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," Amazon CFO Brian Olsavsky told the reporters in a call on October 27, per Reuters. "We are preparing for what could be a slower growth period, like most companies."

The dip in Amazon's share price has also hit Amazon founder Jeff Bezos' net worth. The world's fourth richest person is now worth $113 billion after starting the year at $192.5 billion, according to the Bloomberg Billionaires Index.

Read the original article on Business Insider
 
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RARI_Godwind said:
Ayo Amazon, Meta, Twitter, having big money issues as of late on some synchronized sht. Wtf is really going awn :gucci:
Click to expand...

Interest rates are up & the economic outlook has worsened. The way companies are valued, their valuations come down mathematically when interest rates go up.

A very simple example...if a company brings in $1B of cash a year each and every year, and is expected to continue doing so, after all their activity (operations, financing), and the interest rate is 1%, that company is worth $100B . If the interest rate goes up to 4%, that company is worth only $25B just off interest rates alone.

In a simple situation where future cash flows are all expected to be the same, the math is just:
Company value = Cash the company pulls in after doing business / interest rate

Then, layer on the fact that that same company may only bring in $750M a year because the economy is bad, and it's a double whammy.

Another thing is that...not everyone buys companies based on valuation. If a bank is offering a 1% interest rate, and Meta & Amazon, etc. have been growing their stock price by 6, 10, 15% a year...why would you put your money in the bank if you think this will continue? You might just look at that growth and assume it's going to go on forever, invest in the stock, and this drives the stock higher itself.

Then...if interest rates go up to 4%, and now these companies economic outlooks are looking shaky, you pull your money and put it in the bank (or US treasuries) and just chill. The stock of the companies then craters.

The way companies are valued and that thought process of "should I invest in a company or put it in something (relatively) risk free like a savings account or US treasury" are directly connected, but that's a longer post.
 
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