By
Chimamanda U. Martha
March 11th, 2024
E-commerce giant Amazon becomes the first publicly-traded company to lose $1 trillion in stock value amid economic recession.
Amazon (NASDAQ: AMZN) has become the first public company in the world to lose $1 trillion in market value. This unpleasant development comes from several macroeconomic factors, including soaring inflation and tightening monetary policies (steepening interest rates). In addition, Amazon’s substantial stock price devaluation is also due to internal issues such as disappointing earnings updates and weak guidance that triggered a historic selloff of the company’s stock this year.
Amazon shares dropped 4.3% to $86.14 on Wednesday, which drove the company’s market value to around $879 billion. The prominent tech company’s new value is a far cry from its $1.88 trillion record close back in July 2021. Amazon’s trillion-dollar value loss is nearly the same as losing Alphabet (NASDAQ: GOOGL) losing its entire market value. The Google parent currently has a market cap of around $1.13 trillion.
Amazon $1 Trillion Loss Adds to 48% Year-to-date Stock Decline for Online Retailer
Amazon has also lost a staggering 48% of its stock value on a year-to-date basis amid the sustained tech crunch of 2022. Although the tech sector has had its ups and downs throughout recent years, this year’s crunch bears the weight of recession talks. For instance, the top five US tech companies by revenue lost a combined $4 trillion in market value as of today. Furthermore, Amazon and Microsoft (NASDAQ: MSFT) were seemingly in a close race to first breach the unwelcome trillion-dollar loss record. The PC and software giant eventually came in a close second with an eye-raising $889 billion loss from a November 2021 high. This November peak was around the same time Microsoft briefly surpassed Apple (NASDAQ: AAPL) to become the world’s most valuable company.
Weighing in on the underwhelming development in the tech space, Amazon CFO Brian Olsavsky explained in a call back in October:
“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. We are preparing for what could be a slower growth period, like most companies.”
Amazon CEO Andy Jassy also echoed Olsavsky’s sentiments following the company’s third-quarter earnings report, saying:
“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.”
Q3 2022
Amazon’s Q3 outing, released last month, fell short of expectations and disappointed investors. The leading online retailer saw its stock sink 13% following weak guidance for the fourth quarter. The company expects a fourth-quarter year-over-year (YoY) growth of no more than 8%. Although this projection sits right for a regular company, it hits below the mark by Amazon standards. The company boomed at the height of the Covid pandemic and even had to onboard more staff to cope with soaring online demand.
Now, Amazon losing $1 trillion in value reflects the substantial decline in e-commerce shopping as shoppers head back into physical retail stores. Furthermore, the massive plunge in the company’s value also puts a huge dent in the net worth of founder Jeff Bezos. The world’s wealthiest individual, Bezos, currently sits in fourth place with a net worth of $109 billion. According to the Bloomberg Billionaires Index, the Amazon founder began the year at $192.5 billion.