Amazon first company to lose $1 trillion in market cap
In his career Jeff Bezos has achieved several distinctions. Apart from being the world’s richest man for a better part of the last 5 years, Bezos also has the distinction of being a pioneer in online commerce, in the cloud business and in the drone business too. However, one distinction even Jeff Bezos would not have bargained for is the distinction of being the only company in history to lose $1 trillion in market cap. In fact, Amazon just achieved that rather unenviable milestone (or you can say dubious distinction) of being the first public company to lose a trillion dollars in market valuation from its rather recent peak.
Yes, Amazon has lost a full $1 trillion in market capitalization, despite being among the handful of companies in the world to scale beyond the $1 trillion mark in terms of market value. The recent $1 trillion fall in market cap is seen as a signal of the nervousness in the markets about the slowdown in the global economy. After all, as the Fed gets more hawkish, the fears of a US recession increase and that has already depressed the level of consumer spending. For a business that is almost like an index of digital consumer spending, Amazon has been the worst hit and that is reflecting in the market cap of Amazon Inc.
However, there is still a difference. At a time when Meta (Facebook) is letting go nearly 13% of its workforce and Twitter has almost let go half of its workforce, Amazon has yet to announce any major lay-offs till date. Like the other technology companies, Amazon was also the victim of too much exuberance post the pandemic. The COVID-19 pandemic sent a lot of users toward e-commerce and online retailers like Amazon became the new kings of the virtual world. This was supported by a massive boom in traffic and revenues and recruitments. As the dividends of COVID growth began to fade, reality is starting to bit.
Recession fears are never great news for online commerce companies and Amazon has taken it on the chin. The recent trigger for the fall in price was that Amazon's third-quarter earnings for the quarter ended September 2022 disappointed investors. However, it was the guidance that really spooked the investors after Amazon predicted that Amazon would grow at less than 8% in the fourth quarter. Overall, from the recent peak this year, the market cap of Amazon, which had touched $1.89 trillion at its peak, is now down to just $879 billion. That is a market cap evaporation of a little over $1 trillion, and entirely during 2022 itself.
However, Amazon is not the only loser in the tech pack. Enough of other technology names have seen top- dollar depletion in market cap. For instance, Microsoft has given up nearly $890 billion in market, falling from $2.49 trillion in November 2021 to $1.67 trillion in October 2022. The big daddy of them all, Apple has slipped from a market cap of $3 trillion earlier in the year 2022 to just about $2.14 trillion. That is again a market cap loss of $860 billion. If you add up the losses of the top 5 technology companies, the market cap depletion is to the tune of $4 trillion or you can say equivalent to the combined GDP of Switzerland, Argentina, and Turkey.
But what the markets are now also appreciating about Amazon is its decision not to let go off its employees, something others have been doing quite freely. For long Amazon has been known for its unfriendly people practices, and this should give them a lot of positive vibes. At the end of the day, it is about whether the global economy shifts gears or not and that does not take too long to change.
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