Amazon Loses $1.88 Trillion in Market Value Due to Rising Inflation, Monetary Policies, and Low Earnings

After joining the $1 trillion dollar valuation club with Apple, Amazon hits another milestone as they become the first public company to lose $1 trillion in market value. This resulted due to rising inflation, low earnings reports, and strict monetary policies.

(Photo : SEBASTIEN BOZON/AFP via Getty Images)
The US giant Amazon logo is pictured on the opening day of a new distribution center in Augny, near Metz, eastern France, on September 23, 2021.

Amazon Loses $1 Trillion in Market Value

Based on a report from Bloomberg, Amazon's shares in the e-commerce and cloud company fell 4.3%, making its market value $879 billion. These numbers are far low than the record that they closed last July 2021 as they recorded $1.88 trillion. As per the report, this was because of rising inflation, strict monetary policies, and continuously reported low earnings from the company.

Aside from this news, the investors of the retail company were disappointed with the reported third-quarter revenues as the company has failed to meet the expected sales. Adding to this is that the company just only expects a 2-8% growth for fourth quarter.

Chief Executive Officer Andy Jassy stated during the Q3 Earnings Call that a lot has been happening with the environment of macroeconomic. He added, "We'll balance our investments to be more streamlined without compromising our key long-term, strategic bets."

Competitors' State

On the other hand, Gizmodo reported that Microsoft Corp. was not far behind Amazon's statistics. The company's market valuation loss totals $889 billion compared to its $1 trillion record from November 2021 during its peak. But the report clarified that these declines were not limited to Amazon and Microsoft only, as the top five tech companies in the United States lost a combined $4 trillion in value for this year. These companies are Apple, Alphabet (Google), Microsoft, Amazon, and Tesla.

Despite the situation the company faces today, Amazon has been avoiding laying off employees which is very rare for a tech company in these trying times, as other competitors have already conducted mass layoffs. But earlier this month, Amazon announced that it will be halting its recruitment plans for its corporate workforce. As per Amazon Senior Vice President of People Experience and Technology Beth Galletti, the company has been conducting these for the past few weeks.

Amazon has been adjusting its growth very carefully since the company peaked during the pandemic when most people are not shopping outdoors. As the pre-pandemic habits resumed because of loose restrictions, shares have fallen by almost 50% in the middle of receiving low sales, high costs, and high-interest rates.

The retail company also projected a few weeks ago the slowest holiday-quarter growth in Amazon's history with shares decreasing to 11% as consumers reduce their spending as they face economic uncertainty. Chief Financial Officer stated after the data has been released that they have been taking action to prepare for what will happen next.

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Written by Inno Flores