Amazon has become the first publicly traded company in history to lose $1 trillion in market valuation amid a volatile economy that has sparked a broad tech selloff.
The Jeff Bezos-founded company, valued close to $1.88 trillion on July 2021, saw its shares fall 4.3 percent on Wednesday, pushing its market value down to $878 billion. Amazon stock has lost nearly 50 percent of its value this year alone (before today's meltup).
The loss comes shortly after Amazon’s market value fell below $1 trillion on Nov. 1 after the company posted disappointing results in its third-quarter earnings and predicted less than spectacular sales for the upcoming important holiday shopping season.
Amazon reported revenue of $127.1 billion in the third quarter, narrowly missing out on analysts’ forecasts of $127.5 billion, while net income fell to $2.9 billion, or $0.28 per share, down about 9 percent from the third quarter a year prior.
The e-commerce giant also projected the company’s slowest fourth-quarter growth ever, with between 2 percent and 8 percent growth compared with the fourth quarter of 2021.
Fears of Recession Grow
The pessimistic outlook comes as fears of a recession grow amid sky-high inflation that many believe will result in weaker sales this year as consumers cut back on spending and tighten their budgets.
“There is obviously a lot happening in the macroeconomic environment, and we’ll balance our investments to be more streamlined without compromising our key long-term, strategic bets,” Andy Jassy, Amazon’s chief executive, said following the third quarter earnings report.
“What won’t change is our maniacal focus on the customer experience, and we feel confident that we’re ready to deliver a great experience for customers this holiday shopping season.”
Amazon saw its business boom during the COVID-19 pandemic amid a surge in online shopping but has now joined other tech giants like Google and Microsoft who have seen their stock price plunge this year amid a widespread stock market sell-off.
Combined, the top five U.S. technology companies by revenue have lost nearly $4 trillion in market value his year, according to Bloomberg.
Brian Olsavsky, Amazon’s chief financial officer, said on a reporters’ call following the most recent results, that the company would be “taking actions to tighten our belt, including pausing hiring in certain businesses and winding down products and services.”
Facebook Cuts Workforce
The latest loss to Amazon comes just a day after Facebook parent company Meta announced it will slash more than 11,000 jobs, reducing the size of its team by about 13 percent, in what CEO Mark Zuckerberg called “some of the most difficult changes we’ve made in Meta’s history.”
Facebook will also be taking a number of additional steps to become a “leaner and more efficient company by cutting discretionary spending” and extending its hiring freeze through the first quarter of 2023.
Zuckerberg said the decision came after a macroeconomic downturn, increased competition, and a pullback in advertising dollars resulted in lower-than-expected revenue.
“At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth,” Zuckerberg said in a blog post announcing the cuts. “Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected.”