Amazon’s $1 trillion loss in market cap hints the worst is yet to come for tech companies

Amazon has become the world's first company to lose $1 trillion in market cap. The top five tech companies have collectively lost over $4 trillion, and the fall in their stock price is showing no sign of seizer in days to come.

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If you still have doubts about the recession, the mounting losses and tanking valuation of companies are convincing enough to make you think twice, especially when it’s related to the world’s largest eCommerce company Inc. (NASDAQ:AMZN).

Amazon has become the first publicly traded company to lose a trillion dollars in its market value. This happened because of rising inflation, tightening money policies and disappointing earnings updates.

The shares in the ecommerce and cloud giant plunged 4.3% on Wednesday, which brought its market value down to $879 billion, from the peak of $1.88 trillion in July 2021. Just a year back Microsoft Corp. and Amazon were neck-and-neck in their race to claim the second most-valued publicly traded tech company. The Windows software maker was close behind, albeit lost $889 million from a November 2021 peak.

Technology and growth stocks have suffered throughout the year. However, fears of a long recession have further dampened the sector’s sentiment. Nearly $4 trillion of market value has been lost by the top five US technology companies based on revenue this year.

This year, the world’s largest online retailer spent time adjusting to a slowdown in eCommerce growth. Its shares fell almost 50% due to slowing sales, rising costs and increasing interest rates. According to Bloomberg data, Jeff Bezos, the co-founder of Amazon, has seen his fortune plummet by $83 billion to just $109 million since the beginning of the year.

Amazon received a lukewarm response to its festive season sale this year. its holiday quarter’s revenue growth slowed as shoppers cut back on spending due to economic uncertainty. It is resulting in constant declining market value which is tanked below $1 trillion, the lowest since the tech stock rally that was fueled by pandemics more than two decades ago.

Experts believe this is just the tip of the iceberg as the real impact of the recession would be felt in 2023. Companies will have a tough time keeping their growth intact.


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