Tech Titans Lose $4 Trillion on the Stock Market

The big technology companies lost their shine on Wall Street, erasing 4.025 trillion dollars in their stock market value in 2022. This amount is more than three times the Gross Domestic Product (GDP) of Mexico in 2021, which was 1.293 trillion of dollars.

After being the favorites of investors, in the Covid-19 pandemic, today the big technology firms operate in the red in New York.

Their outlook is bleak, say analysts, because the increase in interest rates, inflation at high levels (closed at 7.7% in October in the United States) and the risk of a global economic recession affect them.

But the large losses also translate into large sums that vanish from the portfolios of the owners of the companies.

This year the fortune of the founder of Facebook, Mark Zuckerberg, has fallen 75.400 million dollars; that of Elon Musk 60.900 million and that of Jeff Bezos, founder of Amazon falls 54.400 million dollars.

On the stock market losses of the large technology companies, Meta Platforms (Facebook), is the most affected, it erased more than two thirds of its market capitalization. From being worth 935.645 million dollars in January, to date it is worth 288.435 million. With this, it ranks as the twenty-sixth most valuable company in the world.

Netflix, which is the 91st company by market value, cut its market capitalization by just over half (-53.33%), going from 267.461 million to 125.126 million dollars.

Amazon has lost 43.65% this year on the NASDAQ Composite. The company that was worth $1.69 trillion in January now has a capitalization of $958.445 million. Although it remains the fifth most valuable firm by market capitalization. Alphabet, Microsoft and Tesla are worth 33.69%, 27.44% and 48.07% less, in that order, than at the beginning of 2022.

Alphabet has a market value of 1.244 trillion dollars, it is the fourth most valuable company. Microsoft is worth 1.802 trillion dollars and is the third most valuable in the world. Tesla, the sixth most valuable company, reaches a market cap of 577.616 million dollars.

The company that loses the least is Apple and it is the most valuable in the world, with a market capitalization of 2,294 trillion dollars. Its losses this year amount to 18.31 percent.

Most of these companies lose more than the NASDAQ, which falls 29.37 percent in the year. The NYSE FANG+ I Index loses 18% in 2022.

Stumble upon rate hike

“Interest rate increases affect the results of technology companies, it was a matter of time before the market put a price on them,” said Antonio Salazar, chief analyst at Lia-Marco-Research.

Violeta Todortiva, a senior analyst at Leverage Shares, explained that “the dismal earnings and warnings from executives at companies like Microsoft, Alphabet, Amazon and Meta raised concerns that the Fed’s aggressive interest rate hike , is slowing economic growth and is hurting corporate profits.”

“Until we see clear signs of slowing inflation and a Fed pivot, tech stocks are likely to remain volatile and under pressure,” he said.

Antonio Salazar explained that some companies that have fallen are beginning to look attractive, such as Microsoft and Apple. In the opinion of Barclays analysts, “the prospect of increased security spending bodes well for Microsoft.”

For Meta, the outlook is complicated because its metaverse project has not convinced the market and its shares have fallen by about 70 percent.

With this panorama, announcements arose about massive layoffs of collaborators at Amazon, Meta, Twitter, Netflix and Spotify, to name a few.

judith.santiago@eleconomista.mx