The tech giants lost $4.5 trillion in market value in 2022; understand

Companies like Apple, Amazon, Google and Meta have seen significant declines in share prices, but economists say profits are expected to rise in 2023

The tech giants lost $4.5 trillion in market value in 2022. Apple, amazonAlphabet (owner of Google) And Objective. Apple alone, as of January of this year, has lost more than $1 trillion. Amazon lost half of its market value last year, closing December at $857 billion. Alphabet ended the year worth $787 billion less than in early January 2022, reaching $1.15 trillion.

In percentage terms, Meta, which owns Facebook, recorded the largest drop of the year. The company led by Mark Zuckerberg, who bet everything on the success of the metaverse, lost 60% of its market value in 2022, closing the year at 320 billion dollars. With that, Mark Zuckerberg’s company was smaller than China’s Epic Games owner Tencent, which had a market value of $405 billion at the end of last year.

Reflected on stock prices, the challenging outlook for the technology business has led to the largest wave of layoffs in the history of the industry, globally. There have been more than 50,000 layoffs among big tech companies. The biggest cuts were in Meta and Amazon. Added together, the layoffs reached an estimated 40,000 worldwide. Even Apple, the world’s most valuable company, has laid off. The iPhone maker has fired 100 recruiters as part of its downsizing plan.

What explains the decline?

According to analysts interviewed by Stage, the year 2022 saw the largest decline in the US stock market since 2008 and marked the belated impact of the pandemic on the shares of technology companies. At the same time, even in the case of cyclical consumer businesses, such as Coca-Cola and Nike, companies with market values ​​more suited to the reality of their profits have stood out. In other words, the year was characterized by a return to the so-called “old economy”.

“The market has started to realize that price cannot only be linked to the quality of the business, but also to the expectations of the business,” says Guilherme Novello, partner and senior technology analyst at WHG. “In the case of Amazon, the top growth is the cloud area, AWS, which has slowed down a lot, which has weighed against the multiple. Microsoft, which has Azure, has experienced the same thing and had its guide revised downwards”.

Rafael Nobre, international analyst at XP, says the fall of the US stock market and technology companies is the result of a combination of events.

“In 2022, there was a major correction in the US stock market, which was trading at 21 times earnings or more. The Federal Reserve tried to control inflation with the higher interest rate and that caused the the stock market. Investors have been reflecting on the impact of these rising ever more contracting forces in the economy, and technology companies have suffered the most because most of them are growth companies, with expectations of future profits,” says Nobre .

After the period of job cuts and the adjustment of investor expectations, analysts estimate that the tech giants are positioned to increase profits in 2023.

“The goal of the companies is to increase profits after the 2022 layoffs. The cuts are symbols of the reduction of excessive movements that were made during the height of the pandemic. Now companies are looking for greater efficiency. At the same time, it is worth it’s worth mentioning that those fired in 2008 founded companies like Airbnb and Uber,” says Guilherme Zanin, an analyst at Avenue.

Layoffs x Hiring

Big tech companies have generated noise with mass layoffs, but have started to ramp up staff rapidly in recent years.

A survey conducted by WHG shows that Meta hired more than 42,000 people between the end of 2019 and the third quarter of 2022, which represents a 94% increase in staff. Amazon, on the other hand, added 746,000 employees in the same period, a 93% growth in headcount. Alphabet also grew by 57% in this indicator, with 67.8 thousand hires. Microsoft added 58,000 new people to its staff over the period, while Apple was the most conservative of the big tech companies, hiring 27,000 employees, up 20% from the total number.

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Source: Terra

Camila

Camila Luna is a writer at Gossipify, where she covers the latest movies and television series. With a passion for all things entertainment, Camila brings her unique perspective to her writing and offers readers an inside look at the industry. Camila is a graduate from the University of California, Los Angeles (UCLA) with a degree in English and is also a avid movie watcher.