Amazon, one of the first businesses to join the exclusive club of companies valued at $1 trillion, recently reached a new, albeit less desirable, milestone. The Everything Store, owned by Jeff Bezos, made market history this week when it became the first publicly traded company to lose $1 trillion in market value.
The astounding numbers, which were first reported by Bloomberg, are the outcome of a deteriorating economy, persistently depressing earnings reports, and significant stock selloffs. Amazon, which was valued at $1.882 trillion on June 21, reported a valuation of only $878 billion on Thursday. With market valuation losses averaging around $900 billion, Microsoft, which for a brief period last year briefly overtook Apple as the most valuable company in the world, wasn’t far behind. The combined declines of the two companies show the impact of a terrible year that most in tech would like to forget soon.
These declines affect more companies than just Amazon and Microsoft. According to reports, the top five U.S. tech companies lost a combined $4 trillion in value this year. That is greater than the combined GDPs of Turkey, Argentina, and Switzerland, to put it in perspective.
Particularly Amazon let down investors last month when third-quarter revenues fell short of expectations. Even worse, the company is predicted to only experience 2-8% year-over-year growth in the fourth quarter. That would be acceptable for a typical business, but Amazon, which was until recently a relentless growth engine, is anything but typical. Amazon, like many other businesses, has had to deal with dwindling e-commerce sales as customers start to trickle back into brick-and-mortar stores less concerned about COVID-19.
After the release of the third quarter earnings report, CEO Andy Jassy said, “There is obviously a lot happening in the macroeconomic environment.” “And we’ll balance our investments to be more efficient without sacrificing our important long-term, strategic bets,” the statement continued.
Amazon has so far avoided the startling layoffs that have affected so many of its peers in the tech industry. That is not to say that there aren’t any causes for alarm. The company took action this month to extend a prior hiring freeze to include all corporate employees. The main causes of the slowdown, according to a memo from Amazon Senior Vice President of People, Experience, and Technology Beth Galetti, are an uncertain economic outlook and a rise in hiring in recent years.
The decline in the value of Amazon’s stock has also hurt Jeff Bezos’s wealth, who founded the company. After beginning the year at $192.5 billion, the fourth-richest person in the world is now valued at $113 billion.